HUBFX Market Report – 22 November, 2024

USD/JPY Technical Analysis: Navigating Key Levels and Trends

1. Market Overview: A Week of Rangebound Movement

The USD/JPY pair has exhibited a rangebound trading pattern throughout the past week.

• Dollar Trends: The US Dollar remained stable as markets anticipate future catalysts, particularly the Federal Reserve’s potential rate cuts by the end of 2025 (currently priced at three).
• JPY Drivers: Japanese CPI data for October slightly exceeded expectations at +2.3%, just above the BoJ’s target. This fuels speculation around a potential December rate hike, with markets assigning a 58% probability to this scenario.

Despite sporadic late-day strength in the USD, these gains were largely erased, leaving the pair oscillating around critical levels.

2. Daily Chart Analysis: Consolidation Around 155.00

• Key Range: USD/JPY has remained steady near the 155.00 handle, consolidating without a clear breakout.
• Buyer Strategy: Support at 152.00 offers a better risk-to-reward setup for buyers, who may position for a rally towards 160.00 if momentum strengthens.
• Seller Approach: A decisive break below 152.00 could signal a move to target lower levels.

Outlook: Until a major catalyst emerges, this rangebound activity is likely to persist, with key levels dictating short-term action.

3. 4-Hour Chart Analysis: Watching the Upward Trendline

• Trendline Rejections: An upward trendline has repeatedly served as resistance. Buyers may continue to use it for positioning, aiming for new highs.
• Risk for Sellers: A breakdown below this trendline could open the door for a deeper correction, particularly if key support levels fail to hold.

4. 1-Hour Chart Analysis: Mixed Signals

• Breakout and Reversal: The pair briefly broke above a minor downward trendline yesterday, sparking hopes for new highs. However, given the overall lack of momentum, this move might be a false signal.
• Key Zone: Price action will likely test the average daily range, which could cap gains unless bolstered by a fresh catalyst.

5. Upcoming Catalysts: Economic Data to Watch

• US Data: Today’s PMI data may provide short-term volatility, offering hints about broader economic momentum.
• Japan’s Economic Updates: Continued speculation about BoJ policy shifts adds uncertainty to JPY movements, especially with increasing scrutiny on inflation data and potential fiscal stimulus.

6. Broader Implications: Balancing Risks and Opportunities

• For Buyers: Key support at 152.00 and trendline adherence provide a tactical entry point for a potential rally to 160.00.
• For Sellers: Watch for any signs of weakening momentum near resistance levels. A break below 152.00 could signal significant downside potential.
• For Traders: Monitor how upcoming data influences rate hike probabilities for both the Fed and BoJ, as these will likely drive medium-term direction.