FOREX: USDJPY Surges Back Above 158.00, Breaches Key Resistance
- While currency markets had some initial volatile swings in the aftermath of the US employment data, the mixed report has kept aggregate moves for the dollar in check. The softer-than-expected headline NFP release (and negative revisions) were assessed against the downtick in the unemployment rate and firmer-than-expected Y/Y AHE, prompting this week’s underlying theme of moderate dollar strength to prevail.
- This week’s 0.75% advance for the USD index has doubled the recovery from the December lows, with the DXY now operating back above the 99.00 mark as analysts push back their bets for Fed easing this year.
- Japanese yen weakness was a key characteristic of the FX story on Friday, with an early advance for USDJPY through 157.00 preceding the US data. 157.80 capped the price action immediately after the scheduled release, before a swift reversal took us back to 157.40.
- However, domestic developments then quickly took focus amid headlines that Japan’s PM was considering whether to dissolve the lower house, renewing the fiscal concerns that has weighed on the yen since the October election. USDJPY shot quickly higher, breaking key resistance at 157.89 to trade as high as 158.18. The path of least resistance is clearly higher for the pair, although further rhetoric surrounding potential intervention may prevent a rapid acceleration from current levels.
- Elsewhere across the G10, most majors have steadily been grinding lower from their Tuesday highs, with the likes of EUR, GBP, AUD, NZD, CHF and CAD all around 1% below the week’s peaks. The main exception to dollar upside is USDCNH, which is holding around 6.9800 (session lows were at 6.9757), after the USDCNY fixing set a fresh low since 2024 earlier.
- Alongside higher equities and metals today, this is keeping a favourable backdrop for the EM FX basket, with the likes of BRL and ZAR relative outperformers on the session.
- The focus turns to US CPI data due Tuesday, the final setoff inflation data before the Fed’s Jan 28 meeting.
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SOFR: Heavy Buying Sep'26 SOFR Futures
- Heavy short end buying with the FOMC policy annc coming up in an hour.
- +50,000 SFRU6 96.76 to 96.77 (+0.035 to +0.045) appr DV01 $1.25M
- This after some +75,000 bought from 96.75 to 96.77 a few minutes earlier.
- As a result, projected rate cut pricing gaining momentum vs. morning levels (*): Dec'25 at -23.5bp (-23.5bp), Jan'26 at -29.4bp (-29.1bp), Mar'26 at -36.9bp (-35.5bp), Apr'26 at -41.9bp (-39.6bp).
EURUSD TECHS: Bull Cycle Still In Play
- RES 4: 1.1779 High Oct 1
- RES 3: 1.1747 50.0% retracement of the Sep 17 - Nov 5 bear leg
- RES 2: 1.1728 High Oct 17
- RES 1: 1.1694 50.0% retracement of the Sep 17 - Nov 5 bear leg
- PRICE: 1.1647 @ 16:20 GMT Dec 10
- SUP 1: 1.1607 20-day EMA
- SUP 2: 1.1547 Low Nov 26
- SUP 3: 1.1491/1469 Low Nov 21
- SUP 4: 1.1469 Low Nov 5 and the bear trigger
EURUSD is in consolidation mode but continues to trade closer to its recent highs and a bull cycle remains intact. The recent breach of key short-term resistance at 1.1656, the Nov 13 high and a bull trigger, highlights a potential reversal and opens 1.1694 next, a Fibonacci retracement. A breach of this retracement point would strengthen the developing bull theme. Initial support to watch is 1.1607, the 20-day EMA. A breach of the EMA would be bearish.
EURUSD TECHS: Bull Cycle Still In Play
- RES 4: 1.1779 High Oct 1
- RES 3: 1.1747 50.0% retracement of the Sep 17 - Nov 5 bear leg
- RES 2: 1.1728 High Oct 17
- RES 1: 1.1694 50.0% retracement of the Sep 17 - Nov 5 bear leg
- PRICE: 1.1647 @ 16:20 GMT Dec 10
- SUP 1: 1.1607 20-day EMA
- SUP 2: 1.1547 Low Nov 26
- SUP 3: 1.1491/1469 Low Nov 21
- SUP 4: 1.1469 Low Nov 5 and the bear trigger
EURUSD is in consolidation mode but continues to trade closer to its recent highs and a bull cycle remains intact. The recent breach of key short-term resistance at 1.1656, the Nov 13 high and a bull trigger, highlights a potential reversal and opens 1.1694 next, a Fibonacci retracement. A breach of this retracement point would strengthen the developing bull theme. Initial support to watch is 1.1607, the 20-day EMA. A breach of the EMA would be bearish.
