Daily Analysis Forex Mix

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USD/JPY consolidates with a slightly bullish bias

Over the past week, the safe-haven USD/JPY pair has traded range-bound between 157.200 and 158.500. This movement has been driven by the continued rise in US Treasury yields and uncertainty surrounding Bank of Japan (BoJ) policy. On October 8, USD/JPY formed a short-bodied bearish candle with wicks at both the top and bottom; prices ranged from a low of 157.528 to a high of 158.366, closing at 157.891 on the FXOpen chart.

Strong USD is supported by solid 10-year US Treasury yields. Expectations that Federal Reserve interest rates will remain elevated are prompting capital to flow back into dollar-denominated assets. The 10-year US Treasury yield briefly surged to 5.34%, while the DXY hovered around 102.4. FOMC minutes also revealed that a majority of members see the possibility of another rate hike before the end of the year.

US data releases today are relatively light. Markets will be closely watching the University of Michigan Consumer Sentiment and inflation expectations. Of greater importance are movements in Treasury yields; if yields rise above 5.35%, USD/JPY could see upward momentum, whereas a decline in yields could open the door for a correction.

The BoJ appears inclined toward caution. Following a rate hike to 1.25% at the September meeting, signals from within the BoJ ahead of the late-October meeting suggest reluctance to aggressively raise rates again. Market concerns regarding a slowdown in the pace of BoJ policy tightening are weighing on the Yen. The BoJ has noted that inflationary pressures are broadening, and Governor Ueda has emphasized the importance of keeping inflation near the 2% target.

Japanese household spending data due today is also drawing market attention. Consensus forecasts suggest a year-on-year (YoY) figure of around -3.5%, compared to the previous -3.6%. Stronger data could bolster the JPY by reinforcing the belief that the Bank of Japan (BoJ) still has grounds for an interest rate hike. A key factor to watch is the possibility of foreign exchange intervention. With USD/JPY trading in the 158–160 range, the yen is already weak, and the Japanese government has previously affirmed that the principle of coordination with the US regarding FX intervention remains in effect.

Should strong comments emerge from Japan's Ministry of Finance or BoJ officials, USD/JPY could drop rapidly, even amidst strong US fundamentals. Remarks or rumors from BoJ officials leading up to the October 29–30 monetary policy meeting could determine the direction of the USD/JPY trend.

Technically, USD/JPY is trading below the 200-day EMA with an RSI of 51; chasing buy positions at high levels is less than ideal given the strength of US yields and the dollar, alongside the risks of intervention and a potential hawkish shift by the BoJ. The projected daily range for USD/JPY is 157.500–158.500, with an extreme range of 156.800–159.000. Immediate support lies around 157.550, with the next target at 156.800. Immediate resistance is around 158.500, with the next target at 158.800. This forecast could be wrong.

USD/JPY D1

On the daily chart, USDJPY is trading above the middle band. The Bollinger Bands appear to be contracting, indicating a decrease in volatility.

The MA50 sits just above the middle band, tracing a downward channel; the price's position on the line indicates sideways movement. The MA200 lies above the MA50, tracing a flat channel, which indicates sideways movement over a longer timeframe.

The TDI indicator's VB High reads 62 and the VB Low reads 28; the 34-point spread reflects the daily volatility level.

The Market Base Line reads 45 with a flat channel, implying that bearish weight exceeds bullish weight.

The RSI Price Line reads 52 with a flat channel, indicating sideways movement.

The Trade Signal Line reads 54 with a flat channel, indicating sideways movement.

USDJPY H4

On the 4-hour chart, USDJPY is trading near the lower band. A Bollinger Band squeeze reflects a sideways market and low volatility.

The MA50 sits right at the lower band, tracing a flat channel; the price's position on the line indicates sideways movement. The MA200 lies below the lower band, tracing a flat channel, indicating sideways movement.

The TDI indicator's VB High reads 59 and the VB Low reads 46; the 13-point spread reflects the 4-hour volatility level.

The Market Base Line reads 52 with a flat channel, implying that bullish weight exceeds bearish weight.

The RSI Price Line reads 44 with a downward channel, indicating a trend with a bearish bias.

The Trade Signal Line reads 49 with a flat channel, indicating sideways movement.

 

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EUR/JPY leans bearish with potential for consolidation

Price action in the EUR/JPY cross last week was confined to a narrow range with a slight bearish bias. On Friday, October 9, EUR/JPY formed a "hammer" pattern—with a high of 177.868, a low of 176.719, and a close of 177.103—according to FXOpen charts.

The Bank of Japan (BoJ) has raised its benchmark interest rate to 1.25%, the highest level in approximately 31 years. Broadening inflation in Japan reinforces the likelihood of further policy tightening. If expectations for rate hikes rise, the yen could exert downward pressure on the euro. However, domestic political uncertainty and expectations of a slower pace of rate hikes have prevented the JPY from strengthening sharply.

The interest rate differential between the Eurozone and Japan still favors the euro, providing structural "carry trade" support that prevents EUR/JPY from falling too steeply.

Japan has previously intervened heavily to prop up the yen. The threat of renewed intervention could trigger a rapid appreciation of the yen, particularly if it weakens sharply.

The ECB raised its deposit rate to 2.50% in September. However, ECB officials have recently signaled no rush to raise rates further. An economic slowdown in the Eurozone limits the ECB's scope to adopt a hawkish stance, thereby capping the euro's potential gains against other currencies.

As a "risk-on" currency, the euro's performance is also influenced by global equity market stability and geopolitical dynamics.

Traders are closely monitoring risk-on versus risk-off sentiment. If global stock markets rally, EUR/JPY tends to rise. Conversely, if panic or a downturn hits global stock markets, the Japanese yen becomes more attractive as a safe-haven currency, potentially pushing EUR/JPY lower.

The market also remains wary of sharp movements in the JPY. Hawkish comments from Bank of Japan (BoJ) officials regarding future interest rates could trigger a sharp reversal in EURJPY.

Bond yield trends are also a key focus—specifically the spread between 10-year German bonds (Bunds) and 10-year Japanese bonds (JGBs). A widening yield spread could support a rise in EURJPY.

Today, October 12, is Sports Day. Domestic market activity in Japan is reduced, which may lead to thinner liquidity and potentially erratic price movements. An ECB Vice President is scheduled to speak today; traders will be closely watching for statements regarding inflation and potential interest rate changes. Pressure on French bonds could weigh on sentiment toward the euro.

From a technical perspective, EURJPY is trading below the 200-day EMA, with the RSI at the 33 level. EURJPY is expected to trade within the 176.000–178.000 range. Immediate support lies around 176.500, with the next target at approximately 176.000. Immediate resistance is around 177.800, with the next target at approximately 178.000. This forecast could be wrong.

EURJPY D1

EURJPY's daily movement is near the lower band. The Bollinger Bands are tending to widen slightly, indicating a slight increase in volatility.

The MA50 sits just above the upper band, tracing a downward channel; the price is well below this line, indicating a downtrend. The MA200 is far above the upper band, tracing a flat channel, which indicates sideways movement over a longer period.

The TDI indicator's VB High reads 54 and the VB Low reads 19; the 25-point difference reflects the daily volatility level.

The Market Base Line reads 37 with a downward channel, meaning bearish weight exceeds bullish weight.

The RSI Price Line reads 33 with a flat channel, indicating sideways movement.

The Trade Signal Line reads 32 with a flat channel, indicating a tendency toward sideways movement.

EURJPY H4

On the four-hour chart, EURJPY is below the middle band. The Bollinger Bands are tracing a flat channel with slightly narrowing spacing, indicating range-bound movement and decreased volatility.

The MA50 is above the middle band, tracing a downward channel; the price is below the line, indicating a downtrend. The MA200 is far above the upper band, tracing a downward channel, indicating bearish sentiment over a longer period.

The TDI indicator's VB High reads 54 and the VB Low reads 35; the 19-point difference reflects the four-hour volatility level.

The Market Base Line reads 44 with a flat channel, meaning bearish weight exceeds bullish weight.

The RSI Price Line reads 48 with a downward channel, indicating a trend tending toward the downside.

The Trade Signal Line reads 47 with a flat channel, indicating sideways movement.

 

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USD/CAD maintains a bullish bias driven by monetary policy divergence

The Canadian dollar tended to weaken against the USD on Monday. The USD/CAD pair formed a small-bodied bullish candle with a lower wick; according to the FXOpen chart, the price recorded a high of 1.42876, a low of 1.42399, and a close of 1.42831. However, price action has remained range-bound between 1.42000 and 1.42980 for six days. A successful breakout could see USD/CAD rise further.

Overall, fundamental sentiment continues to favor USD/CAD strength, maintaining a bullish bias driven by the monetary policy divergence between the Bank of Canada (BoC) and the Federal Reserve (Fed). The BoC's interest rate stands at 2.25% following its September decision, while the Fed's rate is in the 3.75%–4.00% range after a hike on September 16. This interest rate differential of approximately 1.50–1.75 basis points attracts capital flows toward the USD due to higher yields compared to the CAD.

Weakening Canadian labor market data and slowing domestic economic growth reinforce expectations that the BoC will maintain a dovish stance. Interest rates that are lower than the Fed's tend to put downward pressure on the CAD.

Meanwhile, the Fed remains more hawkish. Although US consumer sentiment data dipped slightly—limiting a sharp rally—the potential for further rate hikes and the Fed's "higher-for-longer" stance keep US bond yield premiums elevated.

The US dollar hovered near an 18-month high on October 12. Geopolitical tensions in the Middle East have boosted demand for safe-haven assets, including the USD. However, the market remains cautious ahead of the US inflation report scheduled for October 14, which could shift market direction. The US Dollar Index (DXY) rose to the 102.607 level, its highest point since June 2025.

As a commodity currency, the CAD is influenced by oil prices, given Canada's reliance on oil exports. Brent crude reportedly climbed to around US$106.80 per barrel on October 12 due to escalating tensions in the Middle East. Generally, high oil prices can support the CAD by boosting Canada's export revenue outlook, potentially curbing further gains in the USDCAD pair.

Technically, USDCAD is trading above the 200-day EMA. However, the pair faces the risk of a technical correction as the upward momentum shows signs of exhaustion. At the same time, further gains remain possible; buying at current high levels carries the risk of a pullback. The projected price range for USDCAD is 1.42500–1.43800. Immediate support lies around 1.42000, with the next target at approximately 1.41500. Immediate resistance is near 1.42850, with the next target around 1.43800. This forecast could be wrong.

USDCAD D1

USDCAD's daily movement is currently below the upper band. The Bollinger Bands form an upward-sloping channel with wide band spacing, indicating bullish sentiment and relatively high volatility.

The MA50, above the lower band, forms a slight upward channel; the price remaining well above this line indicates an uptrend. The MA200, below the lower band, also forms a slight upward channel, indicating weak bullish sentiment over the longer term.

The TDI indicator's VB High reads 84 and the VB Low reads 36; the 48-point difference reflects the daily volatility level.

The Market Base Line reads 60 with an upward slope, meaning bullish weight exceeds bearish weight.

The RSI Price Line reads 71 with an upward slope, indicating an uptrend within the overbought zone.

The Trade Signal Line reads 71 with a downward slope, indicating a downtrend.

USDCAD H4

USDCAD's four-hour movement is below the upper band. The Bollinger Bands form a flat channel with relatively narrow band spacing, indicating range-bound movement and relatively low volatility.

The MA50, below the middle band, forms a flat channel; the price remaining above this line indicates an uptrend. The MA200, well below the lower band, forms an upward channel, indicating bullish sentiment over the longer term.

The TDI indicator's VB High reads 64, and the VB Low reads 43; the difference of 21 reflects the four-hour volatility level.

The Market Base Line reads 53 with a flat slope, meaning bullish weight exceeds bearish weight.

The RSI Price Line reads 59 with an upward slope, indicating an uptrend.

The Trade Signal Line reads 56 with a flat slope, indicating sideways movement.