USDJPY Analysis
| Performance after Monday | |||||
| Period | Pct | Chg | Momentum | ||
| Monday | 0.25% | 39 Pips |  |
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| Week to-date | 0.23% | 35.701 Pips | |
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| December | 1.93% | 291.7 Pips |  |
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Upcoming key events (London Time)
Tue 01:30 PM USD Monthly Retail Trade (1-mth) Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate) Wed 07:00 PM USD Interest Rate Projections
What happened lately
In the United States, the New York Empire State Manufacturing Index has experienced a sharp drop in December, falling to 0.2 points from a robust 31.2 points in November. This substantial decline suggests a significant weakening of the manufacturing sector’s conditions in New York State. The index measures the level of general business conditions, and a decrease to nearly flat could imply that manufacturers are encountering difficulties perhaps because of fluctuating demand, supply chain disruptions, or cost pressures, among other factors. When an economic indicator of this nature drops so significantly, it typically raises concerns about the health of the broader economy.
The effect of economic data such as the New York Empire State Manufacturing Index on currency markets can be seen through various lenses. For the USDJPY pair, the recent decrease in the index might initially exert downward pressure on the U.S. dollar (USD) against the Japanese yen (JPY). This is due to investors potentially perceiving the U.S. economy as underperforming, which may influence them to shift away from the dollar towards the yen, considered a safe haven asset. However, the reported increase of 0.25% in the USDJPY on Monday to 154.11 suggests that other factors are also at play, which might override the adverse implications of weak manufacturing data.
Investors will likely keep a close watch on upcoming key events, such as the U.S. monthly retail trade report and the Federal Reserve’s interest rate decision and projections. These events tend to have a high impact on market sentiments and the dollar’s strength. Positive retail trade figures or a hawkish interest rate stance by the Fed could bolster the USD, potentially offsetting any negative sentiments stemming from the New York manufacturing index decline. Conversely, disappointing data from these events could accelerate the weakening of the USD against the JPY, further affecting the USDJPY movements. Such macroeconomic news thus forms part of the critical determinants impacting exchange rates in the forex market.
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What can we expect from USDJPY today?
USDJPY on Monday rose 0.25% to 154.11. Price is above 9-Day EMA while Stochastic is rising in overbought zone.
Updated daily direction for USDJPY looks bullish as the pair ended higher after Monday trading session.
Looking ahead for the day, immediate upside resistance level is R1 at 154.62 with break above could target R2 at 155.13. While towards the downside, we are looking at daily low of 153.32 as an important support. Break below this level could weaken the current bullish momentum. A break above 154.48 would suggest bullish bias after recent positive movement.
For the week to-date, take note that USDJPY is bullish as the pair continued to trade higher and is up by 0.23% over the past few days.
Key levels to watch out:
| R3 | 155.78 |
| R2 | 155.13 |
| R1 | 154.62 |
| Daily Pivot | 153.97 |
| S1 | 153.46 |
| S2 | 152.81 |
| S3 | 152.3 |