The Japanese yen got some support on Thursday, as the dollar stabilized and Treasury bond yields declined slightly after mixed economic data from the U.S.
The U.S. services sector slowed in September. The number of new orders fell to the lowest level in 9 months. However, the pace is in line with the forecasts of sustained economic growth in the third quarter.
The dollar lost some of its recent gains after the number of U.S. private sector jobs in September increased by far less than expected, according to the ADP National Employment Report released on Wednesday. Still, experts say more data is needed to determine just how quickly the situation in the labor market will change.
The focus will now be on the key Nonfarm Payrolls report. It will be published on Friday, possibly providing more clarity on the Fed's rate hike path.
According to the CME FedWatch tool, the market now estimates a 24% probability of another 25-basis-point rate hike by the U.S. central bank this year.
On Tuesday, when the USDJPY pair retreated from the 150 level, there were rumors about a possible intervention from the Japanese authorities to support the national currency. However, the Bank of Japan’s data on the money market released on Wednesday did not confirm this information.
On Wednesday, Japan's Finance Minister Shunichi Suzuki declined to comment on whether the country's authorities had intervened. He stressed that exchange rates should remain stable and reflect the main economic indicators.
USDJPY quotes are in the formation of an upward corrective channel on the daily timeframe. Tuesday's trader speculations reduced the pair's value to the local ascending support. This line is restraining the price for now. However, this week's events may break through this local limit.
Divergence of the Relative Strength Index (standard values) on the H4 timeframe confirms the potential price decline within the ascending channel.
Signal:
The short-term outlook for the USDJPY pair suggests selling.
The target is at the level of 146.20.
Part of the profit should be taken near 147.80.
The Stop-loss is set at 150.20.
Bearish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
