USDJPY rises 0.69% to 154.78 despite mixed signals from US and Japan economic data

USDJPY Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.69%	106.099 Pips
Week to-date	0.86%	132.6 Pips
December	2.38%	360.5 Pips

Upcoming key events (London Time)

Thu 03:00 AM JPY Bank of Japan Short-Term Policy Interest Rate
Thu 01:30 PM USD GDP annual rate
Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)

What happened lately

In the United States, the Federal Reserve announced a reduction in the Fed Interest Rate Decision, bringing it down to 4.5% from the previous 4.75%. This marks a cautious phase towards potential future rate cuts. While the short-term interest rate remains unchanged at 4.4%, projections for subsequent years indicate increasing trends — rising to 3.9% for the first year, 3.4% for the second year, 3.1% for the third, and 3% for longer forecasts. Meanwhile, the U.S. housing sector witnessed mixed signals: housing starts declined to 1.289 million, but building permits rose to 1.505 million. Other economic indicators showed improvement with U.S. Industrial Production marginally better at -0.1% and Monthly Retail Trade climbing to 0.7% in November. Retail trade, excluding automobiles, stayed unchanged at 0.2%.

Conversely, in Japan, the Ministry of Finance reported a significant decrease in imports, falling to -3.8% from the previous 0.4%. This resulted in an enhancement of the merchandise trade balance, which improved to -117.6¥ from -462.1¥. Nonetheless, Japan saw growth in the export sector, as 12-month export growth advanced to 3.8% in November, up from 3.1% in October.

The recent developments in economic data from both the U.S. and Japan have influenced the currency exchange dynamics between the USD and JPY. On Wednesday, USDJPY ascended by 0.69% to 154.78. The drop in the Fed rate indicates a potential weakening of the U.S. dollar in the short run, but the upbeat projections and mixed economic indicators lend support to the USD, albeit faintly. In Japan, while the reduction in imports strengthens the JPY, increased exports signal an economic rebound. However, significant upcoming events like the Bank of Japan’s short-term policy interest rate decision, the U.S. GDP annual rate, and the PCE Price Index could further sway the USDJPY pair depending on the outcomes and investor sentiments they evoke.

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What can we expect from USDJPY today?

USDJPY on Wednesday rose 0.69% to 154.78. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for USDJPY looks bullish as the pair ended higher after Wednesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 155.33 with break above could target R2 at 155.87. While towards the downside, we are looking at daily low of 153.33 as an important support. Break below this level could weaken the current bullish momentum. A break above 154.87 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 0.86% over the past few days.

Key levels to watch out: