USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | 1.72% | 266.8 Pips |  |
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| Week to-date | 2.56% | 392.6 Pips | |
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| December | 4.1% | 620.5 Pips |  |
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Upcoming key events (London Time)
Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)
What happened lately
In Japan, the Statistics Bureau reported an increase in the National CPI Inflation Rate to 2.9% in November from 2.3% the previous month. Excluding fresh food, the CPI Inflation Rate also increased from 2.3% to 2.7%. Similarly, the inflation rate excluding food and energy rose to 2.7% from October’s 2.3%. Meanwhile, Japan’s imports for the 12-month period fell sharply to -3.8% in November, down from 0.4% in October. However, the merchandise trade balance improved significantly to -117.6 yen from the revised -462.1 yen in October. Export growth also saw a modest increase, rising to 3.8% from 3.1%. The Bank of Japan maintained its short-term policy interest rate at 0.25%, with no changes from before.
In the United States, the Bureau of Economic Analysis indicated that the U.S. GDP annual rate rose to 3.1% in the third quarter from 2.8% in the second quarter. PCE excluding food and energy also slightly increased to 2.2% from 2.1%. The PCE Price Index remained unchanged at 1.5% for the third quarter, while the GDP Price Index was steady at 1.9%. Housing starts for November decreased to 1.289 million from 1.312 million in October, but building permits increased to 1.505 million from a revised 1.419 million. According to the Department of Labor, U.S. Initial Unemployment Insurance Claims dropped to 220,000 in the week ending December 14, from a previous figure of 242,000. However, data from the Philadelphia Fed indicated that the Manufacturing Business Outlook Survey decreased to -16.4 points in December from -5.5 in November. The Federal Reserve announced a drop in the interest rate decision to 4.5%, indicating a cautious approach to further cuts. Additionally, the U.S. Interest Rate Projections for the 1st, 2nd, and 3rd years showed increases, while the projection for the longer term remained unchanged at 4.4%.
Considering the economic data, the recent movements in the USDJPY can be attributed to the interplay between escalating inflation rates in Japan and varied economic indicators in the U.S. The upward movement of USDJPY suggests that traders are interpreting the Federal Reserve’s cautious stance on interest rate changes and improving U.S. GDP figures as a positive sign for the U.S. dollar. Meanwhile, Japan’s inflation and trade figures are placing downward pressure on the yen. With upcoming high-impact U.S. PCE Price Index data, further shifts in this currency pair could be expected, as traders gauge inflationary pressures and monetary policy responses in both economies.
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What can we expect from USDJPY today?
USDJPY on Thursday rose 1.72% to 157.36. 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 Thursday trading session.
Looking ahead for the day, immediate upside resistance level is R1 at 158.62 with break above could target R2 at 159.89. While towards the downside, we are looking at daily low of 154.46 as an important support. Break below this level could weaken the current bullish momentum. A break above 157.81 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 2.56% over the past few days.
Key levels to watch out:
| R3 | 161.97 |
| R2 | 159.89 |
| R1 | 158.62 |
| Daily Pivot | 156.54 |
| S1 | 155.28 |
| S2 | 153.2 |
| S3 | 151.93 |