USDJPY Gains On Firm Dollar, Weak Japan Data

Fundamental Analysis

* Spending Slump: The Japanese yen continued to weaken against the U.S. dollar, as the greenback maintained its strength amid reduced expectations of a larger-than-expected rate cut. According to the CME FedWatch tool, traders have adjusted their projections for the Federal Funds rate in November, now expecting a 25-basis point cut, which would lower rates to 4.50%-4.75%. This follows the release of the September Nonfarm Payrolls (NFP) report, which showed strong labor demand, a decline in the Unemployment Rate, and continued wage growth. On the Japanese side, weak data added further pressure on the yen, with consumer spending saw only a slight increase of 0.1%. These factors are likely to reduce expectations of further rate hikes by the Bank of Japan (BoJ) in the final quarter of the year.

Technical Analysis

* Technical Breakout: USDJPY was traded higher following recent rebound from its low. MACD which illustrate diminishing bearish momentum signal suggest the pair to likely extend its gains.

*Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 149.550. Conversely, a potential reversal is also to be expected and the price could head back towards 146.950.

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Potential Risks

Looking ahead, investors will pay close attention to the US Consumer Price Index (CPI) data for September, which will be published on Thursday.

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Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.