USDJPY: a correction is possible amid recent developments

A potential rise in the PMI and the US presidential election will increase market volatility. More details in our analysis for 5 November 2024.

USDJPY forecast: key trading points

• Japan’s monetary base: previously at 0.1%, currently at 0.0%
• The US services PMI: previously at 55.2, currently at 55.3
• US presidential election
• USDJPY forecast for 5 November 2024: 151.00 and 150.80

Fundamental analysis

Japan’s monetary base reflects the change in the amount of cash in circulation and the reserves commercial banks hold in their accounts with the Bank of Japan. It includes cash (banknotes and coins) and funds in accounts that banks must hold as security for their liabilities. This indicator compares data from the current reporting period with that of the previous month.

Fundamental analysis for 5 November 2024 shows that Japan’s monetary base is currently at a zero level, which suggests a reduction in consumer spending.

The US services PMI covers various industries, including transport and communication, financial intermediation, business and consumer services, information technology, and the hotel and restaurant sectors.

The forecast for 5 November 2024 appears moderately optimistic. The PMI is expected to increase to 55.3, up by 0.1 from the previous period. An index reading above 50.0 indicates positive sentiment toward the US dollar.

The US presidential election will take place today. This event typically introduces turbulence into market trading and increases volatility.

USDJPY technical analysis

The USDJPY H4 chart shows that the market has extended a consolidation range towards 151.53. Technically, the price could test the 152.42 level from below today, 5 November 2024. After reaching this level, the price might retrace to the local target of 151.00. Subsequently, another upward structure could develop towards 152.42, before a further decline towards 150.80.

The Elliott Wave structure and corrective wave matrix, with a pivot point at 152.42, provide technical confirmation for this scenario for the USDJPY rate. A consolidation range is forming around the central line of the price envelope. A breakout below the range could extend the correction towards the lower boundary of the price envelope, with the target at 150.80.

Summary

Together with the technical analysis for today’s USDJPY forecast, the US and Japanese fundamental data suggest a potential corrective wave towards the 151.00 and 150.80 levels.