Key Economic Events and USDJPY Rebound Insights 

With several high-impact economic events lined up, including Australia’s CPI, US Unemployment Claims, and key employment data from Canada and the US, this week promises heightened market activity and potential volatility. Meanwhile, USDJPY’s technical outlook suggests a bullish rebound, supported by improving momentum indicators and key resistance levels to watch. On the fundamental side, steady expansion in the US services sector and stable job openings point to economic resilience, though rising prices and persistent supply chain concerns warrant caution. Traders should closely monitor these developments to capitalize on emerging market trends.

Wednesday 02:30 am (GMT+2) – Australia: CPI y/y (AUD)

Wednesday 15:30 (GMT+2) – USA: Unemployment Claims (USD)

Friday 17:30 (GMT+2) – Canada: Employment Change (CAD)

Friday 17:30 (GMT+2) – USA: Nonfarm Employment Change (USD)

Since November 15, the USDJPY has steadily declined from its peak of 156.736, shedding over 5% of its value amid a combination of bearish fundamental and technical signals. However, the pair found support at 148.637, where a Long-Legged Doji candlestick formation hinted at a potential shift in momentum.

This initial shift was reinforced by the emergence of a failure swing reversal pattern, indicating growing buying interest. Notably, the trough at 149.353 held above the previous low, and prices subsequently broke past the peak at 151.220, signaling the start of an upward trajectory. The rally gained further momentum as prices moved above both the 20-period and 50-period Exponential Moving Averages (EMAs).

Momentum indicators continue to support this bullish outlook. The Momentum Oscillator remains above the neutral 100 level, indicating sustained upward pressure, while the Relative Strength Index (RSI) stays above its 50 midpoint, confirming persistent buying activity.

Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:

159.349: The initial resistance level is set at 159.349, which mirrors the 161.8% Fibonacci Extension drawn from the swing high, 158.075 to the swing low, 156.013.

160.209: The second price target is identified at 160.209, representing the weekly resistance, R3, calculated using the standard Pivot Points methodology.

161.411: The third price objective is determined at 161.411, which corresponds with the 261.8% Fibonacci Extension drawn from the swing high, 158.075 to the swing low, 156.013.

161.941: An additional price target has been established at 161.941, indicating a peak formed on the weekly timeframe on June 6.

Should the sellers take market control, traders may consider the four potential support levels listed below:

156.736: The initial support level is seen at 156.736, corresponding to the daily high formed on November 15.

155.034: The second support level is estimated at 155.034, representing the weekly support, S2, calculated using the standard Pivot Points methodology.

152.373: The third support level is identified at 152.373, reflecting the 61.8% Fibonacci Retracement drawn from the low point, 148.637, to the high point, 158.418.

148.637: An additional downside target is 148.637, mirroring the swing low from December 3.

In December, economic activity in the services sector expanded for the sixth consecutive month, with the Services PMI rising to 54.1%, up from 52.1% in November. The Business Activity Index increased significantly to 58.2%, marking a strong year-end performance. New Orders and Employment Indexes also indicated growth, with readings of 54.2% and 51.4%, respectively. Supplier Deliveries moved back into expansion territory at 52.5%, while the Prices Index surged to 64.4%, reflecting rising input costs. Despite positive overall momentum, inventories remained in contraction, and backlog orders continued to decline. Nine industries reported growth, supported by seasonal factors and demand preparation, though concerns about tariffs lingered.

Also, in November, US job openings remained steady at 8.1 million, with an unchanged job opening rate of 4.8%, according to the Bureau of Labor Statistics. Hires held at 5.3 million, with a hiring rate of 3.3%. Total separations, including quits and layoffs, were also stable at 5.1 million and 3.2%, respectively. Notably, quits declined to 3.1 million, while layoffs and discharges stayed consistent at 1.8 million.

In conclusion, as markets brace for pivotal economic data this week, the interplay of technical and fundamental factors suggests both opportunities and risks. USDJPY shows signs of a potential recovery, while steady US economic indicators reflect resilience amid lingering challenges. Traders should stay agile, keeping an eye on key levels and broader market dynamics to navigate the evolving landscape.