USDJPY on Friday rose 0.7% to 153.65. Week ending 2024-12-13 rose 2.41%. What’s going on.

USDJPY Analysis

Performance
Period	Pct	Chg	Momentum
Friday	0.7%	106.299 Pips
Week 242024-12-13	2.41%	362 Pips	December	1.64%	247.6 Pips

Upcoming key events for the new week (London Time)

Tue 01:30 PM Monthly Retail Trade (1-mth)
Wed 07:00 PM Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM Interest Rate Projections
Thu 03:00 AM Bank of Japan Short-Term Policy Interest Rate
Thu 01:30 PM Initial Unemployment Insurance Claims
Thu 01:30 PM GDP annual rate | Q3
Fri 01:30 PM PCE Price Index, excluding food and energy (12-mth)

What happened over the week

The U.S. saw a mixed picture in terms of its inflation and economic metrics, according to the Bureau of Labor Statistics. In November, the overall Consumer Price Index (CPI) inflation rate saw a slight uptick to 0.3% from 0.2% in October, indicating a gradual increase in consumer prices. The core CPI inflation rate, which excludes volatile food and energy prices, remained stable at 0.3%, maintaining its consistency from the previous month. This stability extends over a 12-month period where the core inflation rate also held at 3.3%. The annual CPI inflation also modestly increased to 2.7% from 2.6%. While price stability is generally perceived as beneficial, it also indicates underlying inflationary pressures that might concern policymakers. Additionally, the U.S. labor market witnessed a decrease in unit labor costs, which fell to 0.8% in Q3 from 1.9% in Q2, signaling that labor cost pressures are easing. However, the productivity of nonfarm businesses remained unchanged at 2.2%, suggesting a stable output per unit of labor input.

These economic reports can have consequential impacts on the currency market, specifically the USDJPY exchange rate. The steady increase in the U.S. inflation rate, coupled with the stable core inflation index, suggests that the Federal Reserve may pursue a cautious but steady approach to any interest rate adjustments in their upcoming policy meeting. If rates are expected to remain stable or rise, the U.S. dollar could strengthen further against the Yen, potentially pushing USDJPY higher. This is compounded by steady labor productivity and reduced unit costs, which can engender investor confidence in the U.S. economic momentum. Furthermore, the anticipation of high-impact events like the Fed’s interest rate decision could lead to increased volatility and speculative trading in USDJPY, with traders eyeing signals from both the Federal Reserve and the Bank of Japan’s interest rate directions. A stronger dollar bolstered by favorable U.S. economic data could thus continue the upward trend in the USDJPY exchange rate. However, market participants will closely monitor upcoming data releases for further indications.

From social media

The BOJ released the Summary and Outline of the December 2024 Tankan.https://t.co/adoQJau3z3 pic.twitter.com/wfM2kPduLO

— Bank of Japan (@Bank_of_Japan_e) December 13, 2024

What can we expect from USDJPY for the new week and what happened on Friday?

USDJPY on Friday rose 0.7% to 153.65. Price is above 9-Day EMA while Stochastic is rising. For the week ending ,2024-12-13, the pair rose 2.41% or 362 pips higher.

Looking ahead, USDJPY looks mixed as the pair is likely to consolidate above week low of 150.91.

For the new week, our technical outlook looks bullish, immediate upside resistance level at 154.66 (WR1) with break above could target 155.68 (WR2). On the downside, we are looking at week low of 150.91 as an important support. Break below this level could weaken the current bullish momentum. A break above 153.80 would suggest bullish bias after recent positive movement.

For the month of December, USDJPY is up by 1.64% or 247.6 pips higher.

Weekly key levels to watch out:

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