USD/JPY moves ahead of NFP report
The fall comes as the dollar struggles across the board, while the yen continues to outperform after Prime Minister Takeuchi’s landslide election victory over the weekend.
Expectations were for the yen to weaken if Takeichi, a fiscal dove, prevailed by a landslide, but the fact that the yen has strengthened prospects for a more hawkish Bank of Japan and political clarity amid optimism over growth prospects is encouraging speculators to return to short yen positions.
Meanwhile, after a slower-than-expected December slowdown, yesterday’s weakness is compounding, and as investors await today’s non-firm payrolls report.
The delay due to the government shutdown is expected to show that 70,000 jobs were created last month, up from 50,000 in December.
The data comes at a time when markets are trying to decide whether the U.S. economy is simply trending lower or if the labor market is weakening in a way that would force a quick exit.
The data can help shape expectations for Federal Reserve policy. Markets are currently pricing in 60 basis points of Fed easing through the end of the year. Weaker data could lift Fed rate cuts, weighing on USD/JPY
USD/JPY Forecast – Technical Analysis
After running into resistance at 157.65 USD/JPY, the low rebounded, breaking below the 154.50 support to test the rising trend line at 152.80.
Sellers supported by an RSI below 50 will look to break below the trendline to test the 152, 2026 low. A break below here creates a lower low and exposes the 200 SMA at 150.30.
Resistance is seen at 154.50, mid-December, with a rise above this level opening the door to 156.00. A rise above 157.80 creates a high.
Dex AI falls on the falls ahead of disruption concerns and NFP report
European stocks were under pressure on Wednesday, pulled lower by tech and financial stocks amid ongoing worries that new AI models could hurt traditional software businesses.
While fears that AI software companies have been hit with particularly tough measures in the US last week, the concerns are also present in Europe. Shares of French company Dassault dropped nearly 20% and are on track for their biggest daily decline, after the software maker posted disappointing Q4 revenue growth and a weak outlook for the year.
Concerns about AI disruption aren’t just affecting software firms. They are also spreading to other market segments, including insurance companies, asset managers, and index providers, following the release of several new AI tools.
On the macro front, the focus is on the US jobs report later today, which could help gauge expectations for a Federal Reserve rate cut this year.
The report is expected to add 70,000 jobs, up from 50,000 in December, and is expected to increase from 4.4 percent to 4.5 percent.
Slightly weaker jobs data could support expectations of Fed cuts, which would be positive for risk assets globally.
Dex Forecast – Technical Analysis
The rising trendline began to rebound from support, moving above the 50 SMA before encountering resistance near 25,000. Buyers will be seen moving above the 25,000 level towards 25,500 and fresh record highs.
Immediate support is seen at 24,650, the October and July highs and the 50 SMA. A break below 24,200 creates the February low low.