USDJPY on Friday rose 0.59% to 156.28. Week ending 2025-01-17 moved lower by -1.02%. What you need to know.

USDJPY Analysis

Performance
Period	Pct	Chg	Momentum
Friday	0.59%	92 Pips
Week 252025-01-17	-1.02%	-161.099 Pips
January	-0.46%	-71.899 Pips

Upcoming key events for the new week (London Time)

Mon 12:00 AM 2025 U.S. Presidential Inauguration of Donald Trump as the 47th president of the United States
Mon 05:00 AM Martin Luther King Jr. Day
Fri 03:00 AM Bank of Japan Short-Term Policy Interest Rate

What happened over the week

The United States housing sector exhibited mixed signals as December’s Building Permits decreased slightly to 1.483 million from a revised 1.493 million in November, indicating potential future slowdowns in new projects. Conversely, Housing Starts surged to 1.499 million from November’s 1.294 million, suggesting immediate construction activities picked up. Retail trade in December decelerated to 0.4% from the prior month’s 0.7%, reflecting weakened consumer spending. Labor market data showed Initial Unemployment Claims rose to 217,000 from 201,000 the prior week, a worrisome signal of emerging labor market stresses. Despite these mixed figures, the U.S. Manufacturing Business Outlook saw a notable recovery in January, improving from -10.9 points in December to 44.3 points, indicating increased optimism among manufacturers.

Inflation figures revealed modest increases. The CPI Inflation Rate for December rose to 0.4% from 0.3%, while the 12-month CPI Inflation Rate ticked up to 2.9% from 2.7%. Excluding food and energy, the CPI showed a slight decrease both monthly and annually, pointing to a broader slowdown in core inflation pressures. Producer Price Index (PPI) metrics showed a slight decrease of 0.2% monthly, but the annual PPI excluding food and energy rose to 3.5%, indicating businesses were absorbing some inflationary pressures. The monthly Treasury Budget Statement saw a dramatic improvement, reducing the deficit to $87 billion from a hefty $367 billion in November, hinting at easing fiscal pressures.

The USDJPY’s recent movements reflect the US dollar’s relative weakness against the yen, driven by the above data and anticipating upcoming significant events. The mixed economic indicators point towards instability and uncertainty in the US economy, which could warrant a cautious stance from investors. The strengthening yen seen in the Japanese data may imply ongoing market preference for the yen amidst looming high-impact events such as the Bank of Japan’s policy announcement and the US Presidential Inauguration. This positioning could lead USDJPY to experience further volatility, with market participants likely seeking to hedge against uncertainties surrounding these developments. The yen’s relative appreciation suggests continued pressure on USDJPY in the near term amidst these geopolitical and economic shifts.

From social media

Bank of Japan Accounts (January 10) https://t.co/vT9baC4sbn

— Bank of Japan (@Bank_of_Japan_e) January 15, 2025

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

USDJPY on Friday rose 0.59% to 156.28. Price is below 9-Day EMA while Stochastic is falling. For the week ending ,2025-01-17, the pair dropped -1.02% or -161.099 pips lower. Japanese Yen strengthened against the US Dollar as USDJPY hit 4-week low to end week lower.

Looking ahead, USDJPY looks mixed as the pair is likely to consolidate above week low of 154.97.

For the new week, our technical outlook looks bearish, immediate support level is at 154.79 (WS1) with break below could see further selling pressure towards 153.31 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 158.12 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 154.97 would indicate selling pressure.

For the month of January, USDJPY is down by -0.46% or -71.899 pips lower.

Weekly key levels to watch out:

You might also be interested in:

New Residential Construction Source: Census Bureau
Manufacturing and Trade Inventories and Sales Source: Census Bureau
Advance Monthly Sales for Retail and Food Services Source: Census Bureau
Minutes of the Board’s discount rate meetings on November 18, December 9, and December 18, 2024 Source: Federal Reserve
Speech by Deputy Governor HIMINO in Kanagawa (Japan’s Economy and Monetary Policy) Source: Bank of Japan
Balance of Payments, November 2024 (Preliminary) Source: Ministry of Finance