The EURJPY pair succeeded in resuming its bullish attempts yesterday, to hit the extra target at 177.80, to settle below it announces its confinement within tight track that is represented by the initial support at 176.95, and 177.80 level forms a key barrier against the bullish trading.

We remain neutral due to the instability of the price, until surpassing the previously- mentioned levels, to confirm the suggested targets in the near trading, the price success in breaching the barrier and holding above it will increase the chances for resuming the main bullish trend, attempting to reach 178.45 followed by the trading towards the bullish channel’s resistance at 179.60 level, while the decline below the extra support will support activating the attempts of gathering the gains, to reach 176.20 directly, then testing the next support near 175.20.

The expected trading range for today is between 176.90 and 177.80

Trend forecast: Neutral

With yields rising at the same time that the is falling, the Japanese economy is highly vulnerable to any additional setbacks, especially given the country’s extreme sovereign debt load.

USD/JPY Key Points

• With the yen falling and Japanese bond yields on the rise, the Japanese economy is vulnerable to a budget crisis akin the UK’s in 2022.
• Komeito’s failure to endorse Japan’s new PM-apparent Sanae Takaichi is an ominous omen for her tenure.
• For USD/JPY, there’s little in the way of technical resistance until 155.00 (the 78.6% Fibonacci retracement) and then the 159.00 zone beyond that.

If you were actively trading this time three years ago, this current environment may feel eerily familiar.

Back in September 2022, the UK selected Liz Truss as its next Prime Minister. At the time, the was in a clear downtrend while UK sovereign yields were on the rise. A few weeks later, Truss’s Finance Minister, Kwasi Kwarteng, introduced a “mini-budget” focused on fiscal stimulus (large-scale borrowing and tax cuts) for the economy, and the market soundly rejected the budget, driving long-term to multi-decade highs and the pound to multi-decade lows against most major rival currencies:

Source: StoneX, TradingView

Liz Truss ultimately dismissed Kwarteng a few weeks later and then resigned, making her the shortest-serving UK Prime Minister in UK history.

It’s cliché to say that “history doesn’t repeat, but it does rhyme,” but there are some eerie parallels with Sanae Takaichi’s nascent tenure as Japan’s Prime Minister. Last weekend, Takaichi was selected as the leader of the ruling LDP party, making her the Prime Minister apparent.

Takaichi is seen as a protégé of Shinzo Abe, who advocated heavily for fiscal and monetary stimulus to support the moribund Japanese economy. Like the pound three years ago, the yen has been in a clear downtrend for months, and have been rising consistently for years:

Source: StoneX, TradingView

Much like Truss at the outset of her tenure, Takaichi’s leadership has encountered early turbulence, as Komeito, the LDP’s coalition partner, hesitated to endorse her, sparking doubts about her grip on power. While we have yet to see a catalyst akin to Kwarteng’s mini-budget fiasco, the yen is hitting multi-decade lows against the euro and pound, while longer-term sovereign yields are surging.

With yields rising at the same time that the yen is falling, the Japanese economy is highly vulnerable to any additional setbacks, especially given the country’s extreme sovereign debt load:

Source: IMF

Japanese Yen Technical Analysis: USD/JPY Daily Chart

Source: StoneX, TradingView

Looking at the chart above, USD/JPY is in the midst of a huge three-day, post-election surge, rising more than 500 pips from Friday’s close to today’s high. More to the point for technically-inclined traders, the rally has taken the pair through previous resistance at 150.80 and the 61.8% Fibonacci retracement of the H1 drop at 151.65. From here, there’s little in the way of technical resistance until 155.00 (the 78.6% Fibonacci retracement) and then the 159.00 zone beyond that.

While the short-term price momentum remains strong, the pair is now peeking into “overbought” territory on the 14-day RSI, hinting at the potential for a near-term pullback if we get any kind of positive political news out of Japan. That said, traders would likely look to buy any short-term dips as long as the breakout above 150.80 (and the longer-term fiscal issue) remains intact.

Original Post

– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast: GBP/USD Slips as BoE’s Pill Calls for Cautious Approach

The Pound to Dollar exchange rate (GBP/USD) traded mostly flat on Wednesday ahead of the release of the Federal Reserve’s September FOMC meeting minutes.

At the time of writing, GBP/USD was trading at approximately $1.3423, virtually unchanged from the start of Wednesday’s session.

The US Dollar (USD) strengthened against most of its major counterparts on Wednesday, extending its gains as investors sought safe-haven assets amid ongoing geopolitical tensions in Europe and Japan.

The prevailing risk-off sentiment continued to underpin demand for the ‘Greenback’, keeping USD exchange rates on the front foot through the first half of the session.

However, later in the day, the Dollar could face headwinds with the release of the Federal Reserve’s latest FOMC meeting minutes.

If the minutes strike a dovish tone or hint at a greater willingness to cut interest rates, this could prompt a pullback in USD, potentially halting the currency’s recent winning streak.

The Pound (GBP) held its ground against most major peers on Wednesday, showing resilience despite a lack of UK economic data and a broadly risk-off market mood.

Sterling was offered mild support later in the session after comments from Bank of England (BoE) Chief Economist Huw Pill.

Speaking at the University of Birmingham, Pill said policymakers should take a “conservative” approach to setting interest rates and stand ready to act firmly if inflation risks rise.

He reiterated that the Bank must remain focused on price stability, while acknowledging the high level of uncertainty facing the economy.

Pound to US Dollar Forecast: Sparse Data to Prompt Choppy Trade?

Looking ahead to Thursday’s European session, the Pound US Dollar (GBP/USD) exchange rate is likely to remain at the mercy of broader market sentiment amid a continued lack of key economic data.

With the US government still in shutdown, the release of the latest initial jobless claims report will be delayed, leaving investors without fresh US data to guide trading.

In the absence of new catalysts, the ‘Greenback’ is expected to react primarily to shifts in risk appetite.

Should a cautious, risk-off tone persist across markets, the safe-haven US Dollar could stay in demand, extending its recent strength.

As for the Pound, the UK calendar also remains bare, likely leaving Sterling directionless once again.

GBP exchange rates may therefore fluctuate in response to prevailing risk trends and external developments, with the currency likely to struggle to find a firm footing through Thursday’s session.

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– Written by


Ben Hughes

STORY LINK Euro to Dollar Forecast: USD Benefits from Undermined Confidence in EUR and JPY

The Euro to Dollar exchange rate (EUR/USD) slid to its weakest level in six weeks as French political uncertainty, poor German data, and a resurgent dollar combined to leave investors braced for further volatility.

EUR/USD Forecasts: Slide to 6-Week Low

The US Dollar has continued to make headway in global markets with support from Euro and yen selling.

The Euro to Dollar (EUR/USD) exchange rate dipped sharply to 6-week lows at 1.1610 and struggled to recover amid negative sentiment. French developments will be a key element on Wednesday.

UoB commented; “The decline is oversold, but with no sign of stabilisation just yet.”

According to ING; “based on our view that the dollar will face downside risks with today’s Fed minutes and the USD rally looking a bit overdone in general, we think EUR/USD back at 1.170 is more likely than a test of 1.150 in the coming days.”

The yen has remained under pressure following the weekend election while French political fears have continued to unsettle the Euro.

MUFG commented; “The US dollar has benefitted this week from political developments outside of the US which have undermined confidence in the euro and yen in the near-term and overshadowed the more negligible negative impact on the US dollar from the ongoing US government shutdown.”

The latest German data recorded a 4.3% slide in industrial production for August compared with market expectations of a 1.0% decline.

ING commented; “Extremely disappointing industrial data in August has just increased the risk of yet another quarter of contraction for the German economy.”

MUFG added; “the weakness will add to concerns over the disruptive impact from higher tariffs.”

French political developments will continue to be watched closely with Prime Minister Lecornu facing a deadline today to find a solution to the political impasse and budget deadlock.

MUFG commented; “Lecornu’s last-ditch efforts to reach a political agreement by today’s deadline appear likely to fail. President Macron’s close ally and his first Prime Minister Edouard Philippe has even suggested that he should take a more radical step of offering to resign before the end of his term in 2027 on the condition of a budget being adopted.”

The US data flow is continuing to be disrupted by the US government shutdown

Minutes from the September Federal Reserve policy meeting will, however, be released on Wednesday.

At that meeting, interest rates were cut by 25 basis points with Miran dissenting and calling for a 50 basis-point cut.

Markets are still pricing over just over an 80% chance of two further Fed rate cuts by the end of 2025.

There are, however, also doubts whether further rate cuts are appropriate given overall financial conditions which will create further uncertainty.

Macquarie Group global forex and rates strategist Thierry Wizman commented; “With stock indexes near all-time highs, gold prices rallying higher, and corporate bond credit spreads very tight, the case for monetary policy being overly restrictive still looks rather flimsy.”

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TAGS: Euro Dollar Forecasts