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FOREX: Further Volatile Swings for Japanese Yen, USDJPY Approaches 140.25

FOREX
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  • With press articles and ex-Fed commentary boosting the chances of a 50bp FOMC cut next week, the USD index has fallen 0.35% on Friday. As expected, the greenback strength is most noticeable against the Japanese yen, with its sensitivity to moves in core fixed income remaining at elevated levels.
  • Accordingly, USDJPY has broadly been on the back foot, trading down to a 140.65 low ahead of the European open and then reaching as low as 140.41 in recent trade. Price action narrows the gap to a key support at 140.25, the Dec 28 low, which would place the pair at its lowest level since July 2023.
  • Strength for the low yielders has also boosted the Swiss Franc, with USDCHF down 0.3%, although it is worth noting the pair remain around 50 pips higher on the week.
  • Elsewhere, the likes of AUD, NZD and CAD remain broadly unchanged against the dollar, as potential gains are offset by cross/JPY flow.
  • EURUSD stands 0.15% stronger on the session, mainly owing to its weighting within the DXY and is more reflective of the adjustment to Fed pricing. EURUSD has breached initial resistance at 1.1091, the Sep 09 high, and the market’s focus will be on key short-term resistance at 1.1155, the Sep 6 high. A break of it would be a bullish technical development.
  • Later today, we have preliminary UMich sentiment and inflation expectations data. Chinese activity data will be eyed over the weekend. 
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  • With press articles and ex-Fed commentary boosting the chances of a 50bp FOMC cut next week, the USD index has fallen 0.35% on Friday. As expected, the greenback strength is most noticeable against the Japanese yen, with its sensitivity to moves in core fixed income remaining at elevated levels.
  • Accordingly, USDJPY has broadly been on the back foot, trading down to a 140.65 low ahead of the European open and then reaching as low as 140.41 in recent trade. Price action narrows the gap to a key support at 140.25, the Dec 28 low, which would place the pair at its lowest level since July 2023.
  • Strength for the low yielders has also boosted the Swiss Franc, with USDCHF down 0.3%, although it is worth noting the pair remain around 50 pips higher on the week.
  • Elsewhere, the likes of AUD, NZD and CAD remain broadly unchanged against the dollar, as potential gains are offset by cross/JPY flow.
  • EURUSD stands 0.15% stronger on the session, mainly owing to its weighting within the DXY and is more reflective of the adjustment to Fed pricing. EURUSD has breached initial resistance at 1.1091, the Sep 09 high, and the market’s focus will be on key short-term resistance at 1.1155, the Sep 6 high. A break of it would be a bullish technical development.
  • Later today, we have preliminary UMich sentiment and inflation expectations data. Chinese activity data will be eyed over the weekend.