USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | -0.14% | -22.2 Pips |  |
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| Week to-date | -0.98% | -152.8 Pips |  |
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| January | -1.77% | -277.899 Pips | |
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What happened lately
In Japan, the economic data presents a mixed picture. Japan’s large retailer sales remained stable at 3% in December, consistent with November’s figures. However, retail trade experienced growth, moving from 2.8% in November to 3.7% in December. Despite the positive year-on-year figures, the seasonally adjusted monthly retail trade figure took a downturn, falling from 1.9% to -0.7% in December. Inflation indicators showed an increase as Tokyo’s Consumer Price Index (CPI) rose to 3.4% in January, up from 3% the previous month. The core inflation measure, excluding fresh food and energy, also saw a modest rise to 2.5%. Meanwhile, Japan’s unemployment rate improved slightly, dropping to 2.4% in December from 2.5% in November.
In the United States, the economic signals were also mixed. U.S. Pending Home Sales declined sharply in December to -5.5%, a significant drop from 1.6% in November. On the employment front, initial unemployment claims decreased to 207,000 in the week ending 25 January, down from 223,000 previously. The GDP annual growth rate in the fourth quarter also saw a decline, falling to 2.3% from 3.1% in the third quarter. Nevertheless, the flash estimates for the Personal Consumption Expenditures (PCE) Price Index showed an increase in price levels, with the quarterly PCE Price rising from 1.5% in Q3 to 2.3% in Q4. Notably, the Federal Reserve decided to maintain its interest rate at 4.5%, indicating a cautious approach amid varied economic data.
The USDJPY currency pair showed a slight decrease, dropping by 0.14% to 154.21. The varying economic indicators from both countries could lead to uncertainty and volatility in the currency pair. In Japan, the increase in retail trade and inflation could potentially support the yen, but the decline in seasonally adjusted retail trade figures may temper this impact. Conversely, the consistent U.S. economic growth hints at continuous recovery, but the decline in pending home sales suggests weakness in the housing market. The unchanged Fed interest rate reflects a cautious stance which may not strongly support the dollar. Given these dynamics, the mixed data may result in a balanced market perception, thus limiting significant movement in the USDJPY pair.
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What can we expect from USDJPY today?
USDJPY on Thursday dropped -0.14% to 154.21. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDJPY looks bearish as the pair posted lower in Thursday trading session.
Looking ahead for the day, immediate support level is at 153.59 (S1) with break below could see further selling pressure towards 152.98 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 155.20 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 153.78 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 | 156.43 |
| R2 | 155.82 |
| R1 | 155.01 |
| Daily Pivot | 154.4 |
| S1 | 153.59 |
| S2 | 152.98 |
| S3 | 152.17 |