Currency markets in the week ended September 29 were marked by a range-bound USDJPY that was mostly directionless until mid-week, then volatility set in due to the events and outcome of Japan's ruling party presidential election on Friday. Ultimately, Shigeru Ishiba's victory in the presidential election led to sharp yen buying, and the USDJPY plummeted to close around 142 yen.

Let's review the market movements through the week.

September 23 (Mon)
The Tokyo market was closed for Japan's Autumnal Equinox Day holiday, with low liquidity in the market. This sent the USDJPY slightly higher, hovering around the 143 to 144 level.

September 24 (Tue)
The USDJPY temporarily rose to the upper 144 level after Bank of Japan Governor Kazuo Ueda said in a speech that the BOJ has plenty of time to consider a possible rate hike.

However, a lower-than-expected September consumer confidence index released in the U.S. led to dollar selling, with the USD dropping to the upper 142 level overnight.

September 25 (Wed)
New home sales in the U.S. came in at 716,000 in August, above the forecast of 700,000, but down 4.7% from the previous month. The USDJPY rebounded, with dollar bulls gaining momentum as U.S. long-term interest rates rose.

Also on Wednesday, the EURUSD fell from its high near 1.121 during the New York session to close at around 1.114.

September 26 (Thu)
The USDJPY rose to briefly test the 145 level, but jittery trades persisted as U.S. long-term interest rates fell and new unemployment insurance claims came in lower than expected.

September 27 (Fri)
Yen bears gained ground with the increasingly pervasive view that Sanae Takaichi, an advocate of aggressive fiscal policy, had a strong prospect of winning Japan's ruling party presidential election. The USDJPY temporarily rose to 146.49, its highest level since September 3.

However, the final votes resulted in an upset victory for Shigeru Ishiba, which triggered sharp yen appreciation. The USDJPY then plunged to the mid-143 level, after which adjustments upward were limited.

Furthermore, the U.S. personal consumption expenditures (PCE deflator) for August, released on the same day, came in at 2.2% year on year, lower than the 2.3% forecast, sending the USDJPY further downward on the view that inflationary pressures have eased. The PCE core deflator also came in at 0.1% month over month, below the 0.2% forecast, increasing selling pressure on the dollar.

The USDJPY would end the week wiping out much of any gains it made during the week, closing the week's trading in the lower 142 range.

Economic Indicators and Statements to Watch this Week
(All times are in GMT)

September 30 (Mon)
06:00, U.K.: April-June quarterly gross domestic product (revised GDP)
17:55, U.S.: Press conference by Federal Reserve Chairman Jerome Powell
23:50, Japan: Bank of Japan July-September Short-Term Economic Survey of Enterprises (Tankan)

October 1 (Tue)
09:00, Europe: September Harmonised Index of Consumer Prices (preliminary HICP, year-on-year data)
09:00, Europe: September Harmonised Index of Consumer Prices (preliminary HICP core index, year-on-year data)
14:00, U.S.: September ISM Manufacturing PMI

October 2 (Wed)
12:15, U.S.: September ADP National Employment Report (month-on-month data)

October 3 (Thu)
14:00, U.S.: September ISM Non-Manufacturing PMI (composite)

October 4 (Fri)
12:30, U.S.: September change in nonfarm payrolls (month-on-month data)
12:30, U.S.: September unemployment rate
12:30, U.S.: September average hourly earnings

The following currency pair charts are analyzed using an overlay of the ±1 and ±2 standard deviation Bollinger Bands, with a period of 20 days.

The results of Japan's ruling party presidential election have completely changed the direction of the USDJPY. Friday's close, leaving a tall negative candle with a long upper whisker, suggests that the yen will continue to appreciate into the open of next week.

Next is an analysis of the USDJPY daily chart.

Since the pair's decline from July into early August, it had been largely directionless. However, following the results of Japan's ruling party presidential election last Friday, the pair dropped sharply from a point along the +2 standard deviation Bollinger Band to leave an upper whisker. This negative candle on Friday was tall enough to break below the middle line.

However, we note that the middle line has finally turned slightly downward, but has not yet shown a resolute directional sense.

We continue with an analysis of the USDJPY weekly chart.

Though the pair attempted a break above the -1 standard deviation Bollinger Band, it eventually closed down with an upper whisker.

It is possible that the low of 140.24 and the 139 level will be tested after the next week opens.

If the aftermath of the yen buying and dollar selling trend spills over into the EURUSD, the EURUSD may rise in response to dollar selling.

Next is an analysis of the EURUSD daily chart.

The price continues to bounce off the recent high at 1.1201. The rightmost negative candle from Friday has once again failed to close above this recent high, leaving an upper whisker.

We continue with an analysis of the EURUSD weekly chart.

The weekly chart shows two consecutive closes above the 1.1149 level.

The middle line is rising steadily and the price is located between the +1 and +2 standard deviation Bollinger Bands, a chart pattern suggesting strong buying pressure.

The GBPUSD's chart shows a shape with glimpses of greater upward pressure compared to the EURUSD. As with the EURUSD, an upside scenario should also be assumed.

Now, we analyze the daily GBPUSD chart.

The pair has broken cleanly above the previous high of 1.3265, and we can see an instance of the 1.3265 level functioning as a resistance turned support.

The middle line is also rising steadily, which can be read as a predominantly buying phase for the pair.

We continue with an analysis of the GBPUSD weekly chart.

Even on a weekly basis, the 1.2995 resistance, extremely close to the milestone 1.300 level, has also turned to function as a support now that the pair has broken above.

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