USDJPY Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | -0.31% | -48.2 Pips |  |
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| Week to-date | -0.37% | -57.7 Pips |  |
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| January | -1.16% | -182.799 Pips | |
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Upcoming key events (London Time)
Thu 01:30 PM USD GDP annual rate
What happened lately
In the United States, the Federal Reserve has kept the interest rate unchanged at 4.5%, offering no surprises to the market. However, housing market data reveal a slight cooling, with the U.S. House Price Index for November decreasing to 0.3% from a revised 0.5% in October. The durable goods sector displayed mixed signals: the new orders in December saw a decrease to -2.2% compared to November’s revised -1.2%. Notably, durable goods orders excluding transportation increased by 0.3%, which is up from a revised decrease of 0.2% in November. This suggests some underlying resilience in non-transportation-related durable goods.
Orders excluding defense saw a substantial decline, down to -2.4% in December from November’s -0.4%, indicating weakening demand in defense-related sectors. Additionally, nondefense capital goods orders excluding aircraft, a key indicator of business investment, fell to 0.5% from a revised 0.9%. Overall, the data suggests softening economic momentum with specific sectors showing resilience.
The observed economic data and its implications seem to have exerted downward pressure on the USDJPY, which dropped by 0.31% to 155.18. The unchanged Fed interest rate decision likely indicates stability but lacks catalysts for upward movement in the USD, while the softening house price index and lackluster durable goods orders may have contributed to dollar weakness. Market participants may be anticipating further economic data, such as the USD GDP annual rate, to provide clearer direction. The current mixed economic indicators create uncertainty, which generally tends to pressure the currency pair downward, as evidenced by the recent decline.
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What can we expect from USDJPY today?
USDJPY on Wednesday dropped -0.31% to 155.18. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDJPY looks bearish as the pair posted lower in Wednesday trading session.
Looking ahead for the day, immediate support level is at 154.81 (S1) with break below could see further selling pressure towards 154.44 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 155.79 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 154.93 would indicate selling pressure.
For the week to-date, take note that USDJPY is mixed as compared to prior week.
Key levels to watch out:
| R3 | 156.53 |
| R2 | 156.16 |
| R1 | 155.67 |
| Daily Pivot | 155.3 |
| S1 | 154.81 |
| S2 | 154.44 |
| S3 | 153.95 |