USDJPY Analysis
| Performance after Tuesday | |||||
| Period | Pct | Chg | Momentum | ||
| Tuesday | 0.17% | 25.601 Pips |  |
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| Week to-date | 0% | -0.699 Pips |  |
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| February | -1.35% | -208.099 Pips | |
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Upcoming key events (London Time)
Wed 07:00 PM USD FOMC Meeting Minutes
What happened lately
In January, Japan experienced a significant downturn in its trade balances. The Adjusted Merchandise Trade Balance plummeted to -856.6¥, a dramatic decrease from -33¥ in the previous month of December. Similarly, the Merchandise Trade Balance Total saw a sharp decline, dropping to -2758.8¥ from a revised positive 132.5¥ in December. Additionally, the overall merchandise trade balance fell to -2¥ from 130.9¥, indicating a worsening trade deficit. However, there was an improvement in trade flows as Exports for the 12-month period in January rose to 7.2%, compared to 2.8% in December. Imports saw a substantial increase, escalating to 16.7% from a revised 1.7%. The rise in exports and imports shows an increase in global trade activity despite the growing trade deficit, reflecting a complex economic situation.
Meanwhile, in February, the United States reported an increase in the New York Empire State Manufacturing Index, which rose to 5.7 points from the previous -12.6 points in January. This improvement indicates a recovery in manufacturing activity within the state, which could be a positive sign for economic growth prospects in the broader U.S. economy.
Regarding the USDJPY exchange rate, the broader economic context, particularly the massive trade deficits in Japan, might lead to depreciation pressure on the Yen. With Japan’s mounting trade deficit and the United States showing signs of economic improvement, such as the rise in the manufacturing index, the balance of economic prospects currently appears more favorable for the USD than for the JPY. Additionally, market participants might anticipate the upcoming USD FOMC Meeting Minutes as a potential indicator of future U.S. monetary policy directions, which could further influence the USDJPY pair. Consequently, the recent increase in USDJPY could suggest that market sentiment is leaning towards a stronger dollar, impacting the currency pair accordingly. The potential for policy adjustments by the U.S. Federal Reserve could introduce further volatility into the USDJPY exchange rate.
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What can we expect from USDJPY today?
USDJPY on Tuesday rose 0.17% to 152.02. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDJPY looks bullish as the pair ended higher after Tuesday trading session.
Looking ahead for the day, immediate upside resistance level is R1 at 152.35 with break above could target R2 at 152.69. While towards the downside, we are looking at daily low of 151.41 as an important support. Break below this level could weaken the current bullish momentum. A break above 152.22 would suggest bullish bias after recent positive movement.
For the week to-date, take note that USDJPY is mixed as compared to prior week.
Key levels to watch out:
| R3 | 153.16 |
| R2 | 152.69 |
| R1 | 152.35 |
| Daily Pivot | 151.88 |
| S1 | 151.55 |
| S2 | 151.07 |
| S3 | 150.74 |