USD/JPY consolidating losses near 141.00 ahead of the US PMI data

• The Dollar remains vulnerable, with upside attempts capped below 142.50.
• Fed's dovish pivot is still weighing on the US Dollar.
• Next week's BoJ monetary policy decision might provide some support to the pair.

The Dollar remains under bearish pressure ahead of Friday’s US session. The pair’s mild recovery attempts have been capped at 142.50, which leaves the 141.00 support area in play.

The Fed signalled the end of the tightening cycle on Wednesday and boosted hopes that rate cuts might come as soon as in March after their last policy meeting of the year. This has boosted market sentiment, sending US bond yields and the USD tumbling.

Focus on US manufacturing and services data

Later today, the NY Empire State Manufacturing Index and the S&P Global PMIs are expected to confirm that the US economy is cooling in the fourth quarter, which might add selling pressure on the pair.

The focus next week will be on the Bank of Japan’s Monetary policy decision. Investors have been speculating about the possibility of a major policy shift announced in December, although BoJ officials have played down that option. This could provide a fresh impulse to the USD

USD/JPY Technical analysis

From a technical perspective, the pair is trading near the bottom of an expanding wedge, right below 141.00, with the 4h RSI coming up from oversold levels on the 4h charts.

That said, the pair is not showing any clear sign of a trend change. A break of 141.00 would clear the path towards the 140.00 level where the 261,8% Fibonacci extension of the Mid-November reversal is expected to provide relevant support.

On the upside, resistance levels remain at 142.50 and the 144.45 previous support.
 

Technical levels to watch