USDJPY drops as Japan’s GDP growth signals economic slowdown

USDJPY Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.45%	-66.9 Pips
Week to-date	-0.44%	-65.1 Pips
March	-2.11%	-317.8 Pips

Upcoming key events (London Time)

Mon 11:50 PM JPY GDP (3-mth)
Wed 12:30 PM USD CPI Inflation Rate (12-mth)

What happened lately

Japan’s economic data presents a mixed picture for the fourth quarter. The GDP Deflator, which measures the change in prices of all new, domestically produced, final goods and services in an economy, rose slightly to 2.9% from 2.8% in the previous quarter. This indicates mild inflation, suggesting that prices are slowly increasing within the Japanese economy. Despite this slight upward movement, Japan’s overall GDP growth—a key indicator of economic performance—has exhibited a downward trend. Over the past year, the GDP growth has declined to 2.2% from 2.8%, highlighting a slowdown. On a quarterly basis, the GDP rose by only 0.6%, down from 0.7% in Q3, further emphasizing the moderation in economic activity. These figures suggest that while inflationary pressures are present, economic growth is weakening, reflecting possible challenges such as reduced consumer spending or external factors impacting trade and industry.

The recent economic data from Japan could have a significant impact on the USDJPY forex pair. The dip in Japan’s GDP growth signals a potential slowdown in the country’s economic momentum, which could affect investor sentiment. The subsequent -0.45% drop seen in the USDJPY pair may be attributed to this decelerating growth and increased deflationary pressures. Furthermore, as the market consolidates at 147.35, investors will likely focus on the upcoming key economic events for further direction: Japan’s GDP data and the US’s CPI inflation rate. The result of these economic indicators could elaborate on divergent monetary policies between Japan and the US, influencing the future movement of USDJPY.

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What can we expect from USDJPY today?

USDJPY on Monday dropped -0.45% to 147.35. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDJPY looks mixed as the pair is likely to consolidate above 147.15 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 147.85 or trades above daily pivot 147.5. While to the downside, the daily low of 147.30 and 147.15 (S1) as immediate support levels. USDJPY need to break on either side to indicate a short-term bias. A close below 147.30 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: