USDJPY – Volatility Returns and 150.00 Could be Within ReachUS Dollar vs Japanese YenPEPPERSTONE:USDJPYPepperstoneFX markets have been relatively quiet through much of September, taking a backseat to bigger moves in equities and precious metals. However, for USDJPY things may have started to change in the middle of last week, providing a glimpse into opportunities for bigger moves that may lie ahead in a potentially pivotal week for this popular currency. Looking at the price action, USDJPY had been stuck trading between 148.50 and 146.00 for 3 weeks between September 5th and 23rd, with only a brief false break to the downside on September 17th (145.48, Fed rate cut day) to get traders excited. Then, last Wednesday a deeper dollar squeeze led to a pop above resistance at 148.50 to register a 2-month high of 149.92, before drifting back lower to close at 149.52 on Friday (more in technical section below). On the open this morning, USDJPY has moved lower again touching a low at 148.71 (0800 BST) after a speech from BoJ policymaker Noguchi indicated he saw the need for further rate hikes. Although he didn’t indicate his preference for the timing of a rate hike it highlights the sensitivity of traders to central bank decision making. Looking forward, traders may be focused on some key events across the week in the US and Japan that could shape the markets interest rate expectations for the Federal Reserve (BoJ) and Bank of Japan (BoJ) into the end of 2025. In the US, the current health of the labour market could be the main driver of dollar volatility. There are 4 updates scheduled across the week, starting with the JOLTs Job Openings on Tuesday (1500 BST), followed by the ADP Private Sector Payrolls on Wednesday (1315 BST), then Weekly Jobless Claims on Thursday (1330 BST), all culminating with the critical Non-farm Payrolls release on Friday at 1330 BST. It seems the consensus thinking may be for the US labour market to continue gradually weakening, opening the door for the Fed to cut interest rates further at upcoming meetings, however there is some nervousness that a stronger update could ruin those plans, potentially boosting the dollar, whereas a much weaker release could shock the market and send the dollar back lower. In Japan, for those traders hoping the BoJ may raise interest rates again later in October, there is a theory suggesting the release of the Tankan survey, due on Wednesday (0050 BST), a quarterly assessment conducted by the BoJ to evaluate business conditions in Japan, could hold the key to the likelihood of such a move. A strong release could pave the way for BoJ Governor Ueda, who speaks on Friday (0205 BST), to highlight the possibility of a rate hike, potentially boosting the JPY, while a weaker Tankan reading could provide disappointment, weaken the JPY, and open potential for USDJPY to push above 150 for the first time since early August. As you can see there is a lot for FX traders to consider this week. Technical Update: Volatility Returns August and early September marked a quiet phase for USDJPY, with more balanced themes producing choppy, sideways price action. This reflected a tug-of-war between buyers and sellers, with neither side asserting clear dominance. However, as the chart above shows, Thursday’s upside move may be indicating a shift in tone, with prices producing a successful close above 149.14, the September 3rd session high. Even after the price setback that developed on Friday and so far this morning, traders might now be wondering if this breakout suggests a potential transition from consolidation to renewed upside momentum. While this type of activity is not a guarantee of continued price strength, it could indicate a return of USDJPY volatility, meaning it may well be useful to be aware of potential support and resistance levels, to gauge where the next directional risks may lie. Potential Resistance: Having broken and closed above 149.14, the September 3rd high, it is possible this move may now lead to further attempts at price strength. If that is the case, the first possible resistance could now be 150.92, a level which is equal to the August 1st upside extreme. Closes above this 150.92 level may now be required to suggest potential for further price strength to higher levels, which could prompt tests of 151.64, the 61.8% Fibonacci retracement of the year-to-date decline. Potential Support: Despite last week’s breakout, a downside reaction to the recent price strength in USDJPY still remains a possibility and has so far materialised this morning. This could see a further corrective move, with trader attention now perhaps focused on 148.21, which is the 38.2% Fibonacci retracement of the latest advance, as the first support level. Should USDJPY close below 148.21 it could trigger further downside. In this case, the next support might then prove to be 147.16, which is the deeper 61.8% retracement level, with scope if this also gives way, for an extended decline toward 145.48, the September 17th low. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. 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