USD/JPY Fluctuates as Market Awaits Key Data and Policy Signals

UPDATE: The USD/JPY currency pair is facing significant fluctuations as market participants await crucial economic data and policy signals. Last week, the USD weakened across the board, despite a robust US ADP report and ISM Services PMI, highlighting the market’s uncertainty ahead of key reports.

As of now, there’s a 63% probability of a rate cut by the Federal Reserve in December, a sentiment that reflects the current market’s cautious outlook. The upcoming Non-Farm Payroll (NFP) and Consumer Price Index (CPI) reports are critical, as they will likely influence the Federal Open Market Committee’s (FOMC) next decision.

On the Japanese side, the yen has been under pressure since the last Bank of Japan (BoJ) policy meeting, where interest rates were left unchanged. Governor Kazuo Ueda’s remarks regarding spring wage negotiations suggest that any future rate hike may be postponed until January or even March 2026.

Authorities have also intervened verbally, particularly the Japanese Finance Minister, near the critical 155.00 handle. This level appears to be pivotal, as it marks where Japanese officials are beginning to take action against further yen depreciation.

Recent price action indicates that the USD/JPY briefly dipped below the 153.27 level but managed to bounce back. Currently, the market is range-bound below the 155.00 threshold, with traders eagerly awaiting new catalysts.

On the hourly chart, a downward trendline is acting as resistance, with sellers positioning themselves for potential further declines. Buyers, however, are looking for a break above this trendline to increase bullish bets. The average daily range for today has been defined, but with little data expected this week, traders remain on edge.

This week, the only notable data release is the weekly US ADP report scheduled for tomorrow, which could provide additional insight into labor market conditions.

The situation remains fluid, and market participants are closely monitoring developments that could influence the USD/JPY pair in the coming days.