#USDJPY @ 136.366 drifts lower on Friday amid heavy follow-through selling around the USD. (Pivot Orderbook analysis)

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• USD/JPY drifts lower on Friday amid heavy follow-through selling around the USD.
• Bets for less aggressive Fed rate hikes, depressed US bond yields weigh on the buck.
• Traders, however, seem reluctant ahead of next week’s key US data/FOMC meeting.

The pair currently trades last at 136.366.

The previous day high was 137.25 while the previous day low was 136.25. The daily 38.2% Fib levels comes at 136.87, expected to provide resistance. Similarly, the daily 61.8% fib level is at 136.63, expected to provide resistance.

The USD/JPY pair comes under fresh selling pressure on the last day of the week and drops to a multi-day low, albeit lacks follow-through. The pair trims a part of its intraday losses and trades around the 136.25-136.30 region during the early European session, still down over 0.25% for the day.

The US Dollar prolongs its steady descent for the third successive day amid firming expectations for a less aggressive policy tightening by the Fed, which, in turn, is seen weighing on the USD/JPY pair. In fact, the markets seem convinced that the US central bank will slow the pace of its rate-hiking cycle and have been pricing in a 50 bps lift-off in December.

The prospects for a relatively smaller rate hike contributes to the ongoing decline in the US Treasury bond yields. This, in turn, results in the narrowing of the US-Japan rate differential, which benefits the Japanese Yen and exerts additional downward pressure on the USD/JPY pair. The downside, meanwhile, seems limited, warranting caution for bearish traders.

The incoming positive economic data from the United States has been fueling speculations that the US central bank might lift interest rates more than estimates. This might hold back traders from placing aggressive bearish bets around the USD and offer some support to the USD/JPY pair ahead of next week’s key US macro data and the central bank event risk.

The market focus remains on the highly-anticipated FOMC policy meeting on December 13-14. Moreover, the latest US consumer inflation figures are also scheduled for release next Wednesday, which will influence the Fed’s policy outlook. This, in turn, will play a key role in driving the USD in the near term and provide a fresh directional impetus to the USD/JPY pair.

In the meantime, traders on Friday will take cues from the US economic docket, featuring the release of the Producer Price Index (PPI) and the Prelim Michigan Consumer Sentiment Index. This, along with the US bond yields, could provide some impetus to the USD. Apart from this, the broader risk sentiment might produce some trading opportunities around the USD/JPY pair.

Technical Levels: Supports and Resistances

USDJPY currently trading at 136.27 at the time of writing. Pair opened at 136.68 and is trading with a change of -0.3 % .

The pair is trading below its 20 Daily moving average @ 138.51, below its 50 Daily moving average @ 143.51 , below its 100 Daily moving average @ 141.09 and above its 200 Daily moving average @ 134.94

The previous day high was 137.25 while the previous day low was 136.25. The daily 38.2% Fib levels comes at 136.87, expected to provide resistance. Similarly, the daily 61.8% fib level is at 136.63, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 136.2, 135.72, 135.2
• Pivot resistance is noted at 137.2, 137.73, 138.2

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