Forex News

USD/JPY faces resistance near 157.90, with a brief bounce possible, but failure to clear this level could extend the recent pullback toward 154.40–152.80, Société Générale's FX analysts note.

Lower high signals potential pullback

"USD/JPY recently carved out a lower high near 157.90 than the one achieved in January at 158.85. It has retracted towards a steep up-sloping trend line. A brief bounce cannot be ruled out but inability to overcome recent pivot high of 157.90 may lead to persistence in pullback."

"If the down move extends, last month high of 154.40 and recent pivot low of 152.80 could be the next supports."

USD/JPY has started to ease lower in recent sessions, taking cues from a shift in BOJ rhetoric. The timing of the shift appears to coincide with Takaichi-Ueda meeting last week. USD/JPY was last seen at 156.30 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Room for corrective pullback

"Since then, BOJ rhetoric has tilted more hawkish. Masu said that the timing of rate hike was nearing while Koeda said that BOJ must keep raising real interest rates as prices have been 'relatively strong'. Ueda told parliament on Fri that BOJ will debate the 'feasibility and timing' of rate hike in coming meetings."

"We stand by our long-held view that wage growth, broadening services inflation and upbeat economic activities in Japan are some conditions already supportive of BOJ policy normalisation. But the BOJ has strangely maintained a long pause. We still look for BOJ to hike in Dec. Probability of Dec hike has shifted to above 50% from 16% a week ago."

"Mild bullish momentum on daily chart is fading while RSI fell. Room for corrective pullback to play out in the interim. Support at 155.05 (21 DMA), 154.40 (76.4% fibo) and 151.60 (61.8% fibo retracement of 2025 high to low, 50 DMA). Resistance at 157.90 and 158.87 (previous high in 2025)."

Markets are pricing in a near-certain 25bp Fed cut in December, influenced by dovish Fed chatter and signs of a slowing US economy, while the US Dollar (USD) shows mixed reactions, Commerzbank's FX analyst Michael Pfister notes.

Kevin Hassett seen as dovish Fed chair contender

"On Friday, I discussed the correction in interest rate expectations for the December meeting in detail, emphasising that it is important not to focus too much on the movements for this particular meeting, but rather to keep an eye on the bigger picture. It seems as if market participants saw it similarly. In recent days, expectations for the December meeting have changed again, and a further rate cut of 25 basis points is now almost fully priced in."

"This may be partly due to Kevin Hassett emerging as the frontrunner to succeed as Fed chair this week; he is probably one of the more dovish candidates. However, it may also be due to the data, which, while not yet indicating a major slump, does suggest that the US economy is cooling down. It may simply be due to unusual volatility resulting from uncertainty about the next steps. Individual developments should not be overinterpreted."

"However, a correction also seems to be emerging in another direction: After the USD depreciated again this week (with EUR/USD trading above 1.16), the US dollar also moved closer to rate expectations again."

The Oil market is stuck between the potential for progress in Russia-Ukraine peace talks and what that would mean for Oil supply amid a broader risk-on trade as expectations grow for a December interest rate cut by the US Federal Reserve. A peace deal would likely remove much of the supply risk facing the market, potentially leading to the lifting of US sanctions on Russia. For today, though, market action is likely to be relatively muted due to the US Thanksgiving holiday, ING's commodity experts Ewa Manthey and Warren Patterson note.

OPEC+ expected to hold output steady

"OPEC+ is set to meet this weekend. We believe the group will leave production unchanged. The fundamental outlook remains fairly similar to where it was at the group’s last meeting. Admittedly, though, there’s more uncertainty over Russian Oil supply. Earlier this month, the group paused any further supply increases over the first quarter of 2026."

"The Energy Information Administration’s (EIA) weekly inventory report was relatively bearish. According to the release, US crude Oil inventories increased by 2.77m barrels over the last week, a stark contrast to the 1.9m barrels decline the American Petroleum Institute (API) reported the previous day. The increase was driven by a 560k b/d week-on-week decline in crude exports, while imports were up 486k b/d."

"Inventory builds were also reported in refined products, with gasoline and distillate fuel Oil stocks increasing by 2.51m barrels and 1.15m barrels, respectively. An increase in refinery run rates supported the build in product stocks, with run rates rising 2.3 percentage points WoW to 92.3%. An end to refinery maintenance, along with broader strength in refinery margins, supported higher refinery operating rates."

The Dollar Index (DXY) gaps as markets price an 80% chance of a December Fed cut, extending the shift in Fed rhetoric, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Two-way risks with bias skewed to the downside

"DXY gapped lower in the open this morning as Dec rate cut probability continues to rise to 80% amid shift in Fed rhetoric earlier. DXY last seen at 99.59 levels. Our earlier technical caution for spinning top – an indication for indecision as well as a signal for some weakness in the recent USD rebound – played out."

"Daily momentum turned mild bearish while RSI fell. Still see 2-way risks with bias skewed to the downside. Support at 99.00/10 (50 DMA, 50% fibo retracement of May high to Sep low), 98.50 (100 DMA). Resistance at 99.70 levels (21, 200 DMAs, 61.8% fibo), 100.6 (76.4% fibo). US markets are out for Thanksgiving holidays today with no data and Fedspeaks for the week."