The US Dollar is experiencing renewed pressure, leading to the USDJPY pair erasing recent losses. The market’s expectations for US interest rates align with the Federal Reserve’s prediction of two cuts in 2025. Weak US jobless claims data contributed to the US Dollar’s downturn, though the figures remained below the cycle high of 260,000. In Japan, discussion about reducing super-long bond issuance has weakened the yen. The market remains uncertain about another rate hike, but expectations have increased due to higher Japanese inflation. The US-Japan trade deal and inflation trends are key for the Bank of Japan.

USDJPY is showing technical movement on the charts. On the daily timeframe, USDJPY rejected the 146.00 level and is approaching the 142.35 support zone. Buyers may step in at this point, while sellers will look for a break lower toward 140.00. On the 4-hour chart, recent price action reflects US Dollar weakness following jobless claims data. The 1-hour chart shows a minor downward trendline suggesting bearish momentum, with sellers focusing on creating new lows. Upcoming economic data includes the US ISM Manufacturing PMI, US Job Openings, US ADP, and US NFP report, as well as Japanese wage data and US Jobless Claims figures.

Market Reaction to Labor Data

So far, what we’ve seen is a US Dollar underpinned by softer-than-expected labour market data, wiping out earlier strength in the USDJPY. That’s created a renewed push lower, particularly as traders begin pricing interest rates further out, taking the Federal Reserve’s guidance for 2025 at face value. With claims data still comfortably below previous recent highs, it’s enough to rattle confidence but not enough to force immediate policy shifts. However, the signal is clear: weaker jobs data reduces the appetite for dollar longs in the short term.

Meanwhile, Japan offered its own catalyst. With officials floating the idea of scaling back issuance of longer-dated government bonds, debt markets overreacted slightly. As yields were pressured lower, so too was the yen. Combine that with hotter-than-expected inflation figures and now rates traders are reassessing whether the Bank of Japan might yet slip in another hike across the next two policy quarters. That shift in expectations has started to inject mild two-way flows into what was previously a rather one-sided bet.

We’re looking at a pair now trading within a technically sensitive zone. On daily charts, the rejection above 146.00 aligns with previous supply, while the slow grind toward 142.35 indicates a liquidity pocket just waiting to be tested. Whether that becomes a base depends heavily on the reception provided by buyers at that level, but from where we stand, most would recognise the 140.00 support as the more meaningful break point. There’s breathing room, but it’s narrowing.

Shorter timeframes carry additional clues. The four-hour candles, clearly tracking the aftermath of the jobless claims report, have confirmed a series of lower highs. Nothing dramatic, but enough to suggest sellers are selling strength, not waiting for breakdowns. One-hour prints mirror the same pressure, with a light descending trendline holding firm and no real attempt made yet to clear it convincingly to the upside.

Important Economic Indicators

Forward-looking traders are keeping tabs on a particularly dense calendar in the coming week. The US ISM Manufacturing PMI tends to set the tone early in the month, and it’s one of the timelier indicators for demand-side vigour. We’ll also be watching the ADP private payroll print – a notoriously erratic indicator, but the market’s first real taste ahead of the NFP. If both soften even marginally, that may be enough to increase conviction around the Fed’s dovish path. As for Job Openings, if vacancies continue to slide, we’d view that as confirming reduced wage pressure—another tick in the box for dollar bears.

On the Japan side, weekly wage data may stir speculation. If earnings continue to climb steadily, that provides Tokyo with both political and policy flexibility—it’s the kind of data the Bank of Japan will be keen to interpret as justifying tighter conditions, even if in a slow and steady fashion. Should inflation remain persistent, the risk of mispricing tightens further.

As price action continues carving out this descending channel, we’re approaching a tactically important point. Recent bearish momentum isn’t violent but appears consistent enough to form conviction. Until buyers disrupt this sequence with a strong reclaim of previous highs on lower timeframes, there remains little technical justification for upward exposure. Those looking for reversals will require better labour figures or stronger pushback from US policymakers to step back from the dovish tilt.

There’s little to ignore as we go into another data-heavy patch. The pressure is downward, both in terms of macro and market positioning. We’re watching closely where soft support gives way to actual volume—because only then will new risk setups become apparent.

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