• The USD/JPY price analysis points south as the yen finds relief from political uncertainty.
• Traders are pricing a 12% chance of a massive Fed rate cut in September.
• The US will release benchmark revisions for jobs data between April 2024 and March 2024.

The USD/JPY price analysis points south as the yen finds relief from political uncertainty due to a weak dollar. The US dollar traded near a 7-week low against its peers as traders awaited benchmark revisions for US jobs data. At the same time, market participants are anticipating the US consumer inflation report.

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The dollar remained fragile on Tuesday as Fed rate cut expectations increased after Friday’s poor jobs report. The shift to poor employment figures in the US was sudden and unexpected. As a result, the outlook for Fed rate cuts has changed drastically.

Friday’s report revealed an addition of only 22,000 jobs in August. This is a significant slowdown from previous months and puts more pressure on the Fed to lower rates. Currently, market participants are pricing three rate cuts before the end of the year. Additionally, they are pricing a 12% chance of a massive cut in September. Benchmark revisions for jobs data between April 2024 and March 2024 could reveal further weakness. This might increase the likelihood of a huge cut.

As a result, the yen recovered on Tuesday after dipping at the start of the week amid political uncertainty in Japan. The resignation of Prime Minister Ishiba could reshape monetary policy in the country.

USD/JPY key events today

Traders are not anticipating any high-impact releases from Japan or the US today.

USD/JPY technical price analysis: Bears test a solid channel support

On the technical side, the USD/JPY price has dropped to its channel support, where bulls could emerge to push the price higher. However, the bearish bias within the channel is strong, with the price well below the SMA and the RSI under 50.

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For some time now, USD/JPY has traded within a shallow bullish channel. The price has been chopping through the SMA with no clear direction. At the same time, bears and bulls have shown almost equal strength. However, before the price entered this period of correction, bears had reversed the trend and were showing massive strength.

Therefore, the next impulsive move that breaks out of the shallow channel could be bearish. Nevertheless, bears would also have to break below the 146.50 support to confirm a continuation of the previous decline. Meanwhile, if the channel support holds, the price will likely retest the 149.00 resistance.

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Platinum price returned to settle above $1382.00 level, increasing the efficiency of the bullish track, fluctuating near the initial target at $1400.00, the continuation of the attempts to provide positive momentum by the main indicators will increase the chances of resuming the bullish attack, to expect its rally towards $1412.00, then attempts to press on the barrier near $1435.00.

While the price return to settle below $1382.00 will force it to delay the bullish attack and form new correctional waves, which forces it to suffer some of the losses before resuming the main bullish attack by reaching $1362.00.

The expected trading range for today is between $1382.00 and $ 1412.00

Trend forecast: Bullish

Platinum price returned to settle above $1382.00 level, increasing the efficiency of the bullish track, fluctuating near the initial target at $1400.00, the continuation of the attempts to provide positive momentum by the main indicators will increase the chances of resuming the bullish attack, to expect its rally towards $1412.00, then attempts to press on the barrier near $1435.00.

While the price return to settle below $1382.00 will force it to delay the bullish attack and form new correctional waves, which forces it to suffer some of the losses before resuming the main bullish attack by reaching $1362.00.

The expected trading range for today is between $1382.00 and $ 1412.00

Trend forecast: Bullish

– Written by


Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: Analysts Warn GBP Gains Limited Before Fed Cut

The Pound to Dollar (GBP/USD) exchange rate found support below 1.3500 on Monday and pushed towards 1.3540, helped by softer US bond yields and a weaker dollar index at 6-week lows. Analysts see Sterling locked in a near-term range, with momentum capped below 1.3590 ahead of the September Federal Reserve decision.

GBP/USD Forecasts: Range-Bound for Now

UoB said;

“Coming off the previous steep decline, the sharp rebound did not translate into a meaningful build-up in upward momentum. Overall, we view the current price movements as part of a broad range, likely between 1.3430 and 1.3595.”

Scotiabank echoed the range view;

“We look to a near-term range of 1.3480 and 1.3580.”

Both banks see a decisive break above 1.3590 as crucial for GBP/USD to build a stronger rally.

Weaker US jobs data last week reinforced expectations that the Fed will cut rates in September, with markets pricing a 10% chance of a larger 50-point cut.

MUFG commented;

“There is clear evidence that the US labour market deteriorated sharply after President Trump’s Liberation Day tariffs announcement in April.”

Danske Bank was more cautious;

“While political pressure to accelerate policy easing inarguably complicates the outlook, we think risks are skewed towards slower, rather than faster, rate cuts given the risk of more persistent inflation.”

ING noted potential for a short-term dollar bounce;

“We think the US corporate tax payment deadline of 15 September could provide the dollar with some support this week. Seasonally, the dollar does OK in September. We suspect that the DXY could be driven a little higher this week, before a bearish switch into next Wednesday’s FOMC meeting.”

UK fiscal pressures remain in focus after the sharp rise in gilt yields earlier this month.

Rabobank warned;

“Fixing bloated fiscal positions without clobbering the economy and simultaneously finding ways to finance spending priorities has become a policy paradox. Is it simply ‘too late’ to fix? Or can out of the box economic thinking still find a solution?”

Scotiabank’s Shaun Osborne noted some upside for Sterling sentiment after the cabinet reshuffle;

“Markets appear to be endorsing the change, and risk reversals in the options market are showing signs of a shift following their recent dramatic (bearish) turn.”

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Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Buyers Pause Ahead of French Government Vote

The Euro to Dollar (EUR/USD) outlook is caught between European politics and US economic weakness this week.

The pair held above 1.1700 on Monday after last week’s weak jobs report, but traders remain cautious ahead of France’s no-confidence vote, which could trigger fresh elections.

While political risk clouds the Euro, the US labour market remains the dominant driver, with Fed rate cuts seen as inevitable and EUR/USD forecast to push higher into year-end.

EUR/USD Forecasts: The Rally Stalls

The French government confidence vote will be an important short-term issue, although the US economy is liable to remain dominant overall dollar moves.

The Euro to Dollar (EUR/USD) exchange rate has held above 1.1700 on Monday, but held below Friday’s 1.1750 peak triggered by another weak labour-market report.

Dollar sentiment remains weak on expectations of Fed rate cuts, but the French confidence vote has injected caution.

ING commented; “More volatility in a 1.1650-1.1750 range looks likely for EUR/USD this week, and we doubt Thursday’s ECB meeting will be a big market mover.”

Credit Agricole sees the risk of EUR/USD losses beyond 1.1650 if there are fresh elections.

MUFG is bearish on the dollar over the medium term; “Policy divergence between the ECB and Fed heading into year-end supports our forecast for EUR/USD to rise back above the 1.2000-level.”

The US labour market remains a key market focus following last week’s labour-market report.

MUFG added; “The Fed had already signalled it was becoming more concerned by downside risks to the US labour. Those concerns will have been heightened by the August employment report revealing that the US economy added only 22k jobs in August. More worrying for the Fed, the US economy lost -13k jobs in June after further downward revisions to prior months.”

Markets are pricing in a 100% chance of a Fed rate cut next week with a 10% chance of a 50 basis-point cut. Traders are also increasingly confident that rates will be cut three times before the end of 2025.

There is the potential for a further negative development on Tuesday with benchmark revisions.

ING noted; “Tomorrow sees the preliminary annual benchmark revision to the 2025 nonfarm payrolls report. A number in the -500 to 800k is expected. The Fed’s Christopher Waller implied a number of around -720k in his speech just over a week ago. A big downward revision to NFP could trigger some limited dollar weakness.”

The French government is facing a no-confidence vote on Monday with strong expectations that it will lose.

President Macron will have to decide between attempting to form another government or calling a general election.

The latest chatter suggests that Macron may attempt to forge a coalition with the socialists, although this would undermine attempts to curb the budget deficit.

ING sees limited scope for Euro-zone contagion; “we are not looking for a eurozone-wide period of stress. Italy and Spain have been enjoying sovereign upgrades recently, and the European Central Bank has its Transmission Protection Instrument (TPI) if things really get out of hand.”

Credit Agricole does see Euro risks; “a new PM could leave the EUR struggling to hold on to its gains.”

MUFG commented; “We are not expecting the pick-up in political uncertainty in France to derail the euro’s current upward trend and/or encourage the ECB to cut rates further at the current juncture.”

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TAGS: Euro Dollar Forecasts