USD/JPY Key Takeaways

• Strong ISM and JOLTS surveys in the morning were followed by a mediocre bond auction this afternoon.
• The auction showed below-average demand for US Treasuries, potentially signaling fear about the ongoing deficit and potential for inflation to reaccelerate.
• USD/JPY is essentially unchanged on the day, with tomorrow’s ADP and initial jobless claims reports looming as the next potential injection of volatility into the pair

It’s been a mixed day for US data, with better-than-expected readings on the ISM Services PMI and JOLTS Job Openings surveys raising optimism about the US economy before a mediocre 10-year treasury bond auction in the early afternoon.

The auction showed a 2bps “tail”, indicating less demand for the bonds than expected, and dealers were obligated to take on 15.6% of the issue, above the 13.1% average over the last six months. All in all, the auction showed below-average demand for the benchmark US Treasury bond, potentially signaling fear about the ongoing deficit and potential for inflation to reaccelerate.

Stock indices have seen the morning’s gains evaporate, with the 10yr yield rising to 4.69%, its highest level since last April. More to the point for FX traders, the US dollar is edging higher against most of its major rivals, though the moves are fairly limited as we go to press.

Japanese Yen Technical Analysis – USD/JPY Daily Chart

Source: TradingView, StoneX.

Looking at the chart of USD/JPY, the pair attempted a breakout to 6-month highs above 158.00 on the back of this morning’s data releases before reversing back into the holiday period trading range in short order.

Now, rates are essentially unchanged on the day, with tomorrow’s ADP and initial jobless claims reports looming as the next potential injection of volatility into the pair. A confirmed bullish breakout above the top of the range could target 160.00 in short order, whereas a bearish breakdown could open the door for a deeper retracement toward 154.00.

— Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

US Dollar Outlook: USD/JPY

USD/JPY extends the advance from the start of the week to clear the December high (158.09), but the Relative Strength Index (RSI) may show the bullish momentum abating as the recent rise in the exchange rate fails to push the oscillator into overbought territory.

USD/JPY Clears December High Ahead of US NFP Report

USD/JPY climbs to a fresh weekly high (158.43) as the US Bureau of Labor Statistics (BLS) reports that ‘the number of job openings was little changed at 8.1 million on the last business day of November,’ with the Job Openings and Labor Turnover Summary (JOLTS) revealing that ‘the number of job openings increased in professional and business services (+273,000), finance and insurance (+105,000), and private educational services (+38,000).’

Join David Song for the Weekly Fundamental Market Outlook webinar.

David provides a market overview and takes questions in real-time. Register Here

US Economic Calendar

In turn, the update to the US Non-Farm Payrolls (NFP) may also influence USD/JPY as the economy is anticipated to add 154K jobs in December, and evidence of a strong labor market may put pressure on the Federal Reserve to alter the path for monetary policy as the economy shows little signs of an imminent recession.

In turn, a positive development may generate a bullish reaction in the US Dollar as it raises the Fed’s scope to pause its rate-cutting cycle, but a weaker-than-expected NFP report may drag on the Greenback as it fuels speculation for lower US interest rates.

With that said, swings in the carry trade may continue to influence USD/JPY as the Federal Open Market Committee (FOMC) pursues a neutral stance, but the exchange rate may further retrace the decline from the 2024 high (161.95) as it clears the December high (158.09).

USD/JPY Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView

• USD/JPY trades to a fresh weekly high (158.43) following the failed attempt to close below 156.50 (78.6% Fibonacci extension), with a move above 160.40 (1990 high) bringing the 2024 high (161.95) on the radar.
• Next area of interest comes in around the December 1986 high (163.95), but USD/JPY may hold within last year’s range should if struggle to extend the recent series of higher highs and lows.
• A close below 156.50 (78.6% Fibonacci extension) may push USD/JPY back towards 153.80 (23.6% Fibonacci retracement), with a break/close below 151.95 (2022 high) opening up the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone.

Additional Market Outlooks

GBP/USD Recovery Keeps 2024 Range Intact

US Dollar Forecast: AUD/USD Approaches November 2023 Low

USD/CAD Pullback Keeps RSI Below Overbought Territory

US Dollar Forecast: EUR/USD Attempts to Halt Five-Day Selloff

— Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

USD/JPY Key Takeaways

• Strong ISM and JOLTS surveys in the morning were followed by a mediocre bond auction this afternoon.
• The auction showed below-average demand for US Treasuries, potentially signaling fear about the ongoing deficit and potential for inflation to reaccelerate.
• USD/JPY is essentially unchanged on the day, with tomorrow’s ADP and initial jobless claims reports looming as the next potential injection of volatility into the pair

It’s been a mixed day for US data, with better-than-expected readings on the ISM Services PMI and JOLTS Job Openings surveys raising optimism about the US economy before a mediocre 10-year treasury bond auction in the early afternoon.

The auction showed a 2bps “tail”, indicating less demand for the bonds than expected, and dealers were obligated to take on 15.6% of the issue, above the 13.1% average over the last six months. All in all, the auction showed below-average demand for the benchmark US Treasury bond, potentially signaling fear about the ongoing deficit and potential for inflation to reaccelerate.

Stock indices have seen the morning’s gains evaporate, with the 10yr yield rising to 4.69%, its highest level since last April. More to the point for FX traders, the US dollar is edging higher against most of its major rivals, though the moves are fairly limited as we go to press.

Japanese Yen Technical Analysis – USD/JPY Daily Chart

Source: TradingView, StoneX.

Looking at the chart of USD/JPY, the pair attempted a breakout to 6-month highs above 158.00 on the back of this morning’s data releases before reversing back into the holiday period trading range in short order.

Now, rates are essentially unchanged on the day, with tomorrow’s ADP and initial jobless claims reports looming as the next potential injection of volatility into the pair. A confirmed bullish breakout above the top of the range could target 160.00 in short order, whereas a bearish breakdown could open the door for a deeper retracement toward 154.00.

— Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

GBP/USD Forecast: Bullish bias remains intact ahead of US data

GBP/USD capitalized on the broad-based US Dollar (USD) weakness and registered impressive gains on Monday. The pair continues to stretch higher in the European session on Tuesday and trades near the key resistance area at 1.2575.

The improving market mood made it difficult for the USD to find demand at the beginning of the week. Risk flows dominated the action in financial markets and triggered a USD selloff after the Washington Post reported that US President-elect Donald Trump’s aides were exploring tariff plans that would be applied to every country but only cover critical imports. Read more…

GBP/USD: To consolidate between 1.2450 and 1.2550 – UOB Group

Pound Sterling (GBP) is expected to consolidate in a range between 1.2450 and 1.2550. In the longer run, GBP is expected to trade in a range, likely between 1.2420 and 1.2620, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

24-HOUR VIEW: “GBP soared by 0.79% yesterday, closing at 1.2522. The rapid rise appears to be excessive. Today, instead of continuing to rise, GBP is more likely to consolidate, expected to be between 1.2450 and 1.2550.” Read more…

Important DisclaimersThe content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party’s services, and does not assume responsibility for your use of any such third party’s website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.Risk DisclaimersThis website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.