Global Markets Brace for Key Data as USDJPY Slides into Bearish Territory

Key economic events are shaping market sentiment, including Germany’s Preliminary CPI released today, Canada’s GDP m/m on Friday, and China’s Manufacturing PMI early Saturday. These reports are expected to influence trading activity across major currency pairs.

In the currency markets, USDJPY has shown increasing bearish momentum after peaking at 156.736 on November 15. Technical indicators point to potential further downside, while fundamental factors—such as the US dollar’s weakness amid mixed economic data and light holiday trading—add complexity to the outlook.

Thursday All Day – Europe: German Prelim CPI m/m (EUR)

Friday 15:30 (GMT+2) – Canada: GDP m/m (CAD)

Saturday 3:30 am (GMT+2) – China: Manufacturing PMI (CNY)

Since reaching a peak of 156.736 on November 15, the USDJPY currency pair has entered a downward trajectory characterized by increasing bearish momentum. The peak at 155.877 fell short of surpassing the prior peak, signaling a loss of upward momentum. This was followed by a decisive break below the critical support level at 153.270, suggesting the potential for further downside.

Adding to the bearish outlook, the pair has moved below the 20- and 50-period Exponential Moving Averages (EMAs), though the shorter EMA has not yet crossed below the longer EMA, indicating that the trend shift remains in progress.

Momentum indicators reinforce this negative sentiment. The Momentum oscillator is trending below the 100 threshold, and the Relative Strength Index (RSI) remains under 50, both signaling sustained bearish momentum in the near term.

If buyers take control of the market, traders may shift their focus to the following four potential resistance levels:

153.270: The initial price target is determined at 153.270, corresponding to the swing low marked on November 19.

154.609: The second level of resistance is seen at 154.609, which aligns with the weekly Pivot Point, PP, estimated using the standard methodology.

156.736: The third price target is established at 156.736, representing a high marked on November 15.

158.554: An additional price objective is estimated at 158.554, mirroring the weekly resistance, R3, calculated using the standard Pivot Points methodology.

If sellers maintain control of the market, traders may focus on the following four key support levels:

149.052: The initial support level is established at 149.052, representing the 261.8% Fibonacci Extension drawn from the swing low, 153.270, to the swing high, 155.877.

148.152: The second support level is seen at 148.152, aligning with the 50% retracement between the low point, 139.568, and the high point, 156.736.

146.482: The third downside target is 146.482, corresponding to a peak from September 27.

144.834: An additional downside target is observed at 144.834, reflecting the 423.6% Fibonacci Extension drawn from the swing low of 153.270 to the swing high of 155.877.

The US dollar faced broad declines on Wednesday amid light pre-holiday trading as markets absorbed a mix of economic indicators. Third-quarter GDP growth remained steady at 2.8%, while consumer spending data pointed to stalled progress in curbing inflation. Market sentiment suggests a 25 basis point Fed rate cut in December, influenced by uncertainty over tariff policies proposed by President-elect Trump. The dollar weakened significantly against major currencies, with the yen reaching a five-week peak, driven by expectations of a potential December rate hike in Japan.

The yen declined against other G-10 and Asian currencies during the morning session, likely due to position adjustments after its recent gains. On Wednesday, the US dollar briefly fell to 150.444 yen, marking its lowest point since late October, before recovering. With US markets closed for Thanksgiving and only a half-day session on Friday, trading activity is anticipated to be subdued.

With significant economic events like Germany’s CPI, Canada’s GDP, and China’s Manufacturing PMI on the horizon, market participants will closely monitor their impact on global currency movements. USDJPY continues to exhibit bearish momentum, supported by technical signals and a softening US dollar amid mixed economic data and reduced trading activity during the holiday period. While key support and resistance levels provide potential trade opportunities, caution is advised as light volumes and ongoing fundamental uncertainties may lead to increased volatility in the near term.