Selling USDJPY with 146.600 in view amid fundamental dollar weakness

The USDJPY currency pair opened at 148.033 on Thursday, attempting to recover during early trading from yesterday’s drop, which was triggered by weak US JOLTS data. The number of job openings in the country fell to a 10-month low, reinforcing market expectations regarding September’s rate cut by the Federal Reserve (Fed) and putting additional pressure on the dollar. These readings were the key driver behind yesterday’s decline in USDJPY. However, the pair managed to hold within its parallel channel.

The market had almost fully priced in the Fed’s decision to ease monetary policy at its next meeting. Since then, traders’ attention has shifted to Friday’s employment report. Strong figures could bolster the dollar and undermine current expectations for the upcoming rate cut in the US. Conversely, weak results—particularly an increase in unemployment—would have the opposite effect.

Meanwhile, the Japanese yen remains under pressure. Persistent political uncertainty is now hampering the central bank’s efforts, as reflected in rising 30-year government bond yields. Moreover, the Bank of Japan (BoJ) maintains an extremely cautious tone, distancing the prospect of a near-term rate hike and reducing the yen’s appeal.

Overall, both currencies face significant headwinds. The key difference is that traders have largely priced in the weakening of the US dollar, while the Japanese yen is only starting to feel market pressure. This fact is pushing USDJPY up, though the pair’s upside remains limited.

From a technical perspective, the price has been moving sideways in recent days, with a slight hint at an uptrend, as visible on the daily USDJPY chart. The pair managed to consolidate above 147.80. The Stochastic Oscillator sits in neutral territory (between 47 and 34) following its earlier decline, suggesting a technical recovery. The Chaikin Oscillator shows an accelerated change in trading volumes, which may indicate a growing trader interest, but does not confirm a decisive catalyst for the continuation of the current trend. In general, USDJPY remains range-bound, lacking a clear signal for a new directional move.

Consider the following trading strategy:

Sell USDJPY at the current price, while the pair’s growth potential is limited. Take profit: 146.600. Stop loss: 149.200.