USDJPY Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | -0.34% | -52.2 Pips |  |
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| Week to-date | -0.41% | -62.3 Pips |  |
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| February | -1.75% | -269.7 Pips | |
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Upcoming key events (London Time)
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What happened lately
In the United States, recent data showed slight changes in the construction sector for January. U.S. Building Permits edged up slightly to 1.483 million from a revised 1.482 million in December, according to the Census Bureau. However, U.S. Housing Starts saw a notable decrease, falling to 1.366 million from a revised 1.515 million in December. This decline in housing starts indicates a possible slowdown in new residential construction, which might be seen as a temporary setback for the housing market. In February, the New York Empire State Manufacturing Index saw an increase, reaching 5.7 points from January’s -12.6 points. This improvement suggests a positive turnaround in manufacturing activity in the region, offering a glimpse of recovery and potential economic strengthening.
In Japan, January’s economic data presented mixed results. The Adjusted Merchandise Trade Balance deteriorated significantly to -856.6 billion yen from the previous -33 billion yen in December, highlighting widening trade deficits. Despite this, Japan experienced a positive shift in exports, with a year-on-year increase to 7.2% from 2.8% in December. Imports surged substantially, climbing to 16.7% from a revised 1.7%. These numbers demonstrate the complex dynamics within Japan’s trade activities, as increasing imports generally indicate strong domestic demand, but the larger trade deficit may pressure the Japanese economy if it persists. The overall Merchandise Trade Balance Total further highlighted concerns, dropping to -2,758.8 billion yen from a revised 132.5 billion yen in December.
The recent economic news from both the U.S. and Japan holds various implications for the USDJPY currency pair. The modest increase in U.S. Building Permits and the significant rise in the New York Empire State Manufacturing Index suggest a strengthening U.S. economy, which could support the U.S. dollar. Conversely, Japan’s worsening trade balance and increased imports may result in depreciation pressures on the yen. As a result, despite the USDJPY pair dropping by -0.34% to 151.40 recently, these economic indicators suggest a potential stabilization or slight upward pressure on the USDJPY rate going forward, provided U.S. economic data continues to show improvement against Japan’s mixed economic backdrop.
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What can we expect from USDJPY today?
USDJPY on Wednesday dropped -0.34% to 151.40. Price is below 9-Day EMA while Stochastic is falling in oversold zone.
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 150.99 (S1) with break below could see further selling pressure towards 150.58 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 152.31 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 151.24 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 | 153.13 |
| R2 | 152.72 |
| R1 | 152.06 |
| Daily Pivot | 151.65 |
| S1 | 150.99 |
| S2 | 150.58 |
| S3 | 149.92 |