USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | -0.26% | -38.3 Pips |  |
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| Week to-date | -0.13% | -19.6 Pips |  |
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| March | -1.42% | -213.1 Pips | |
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Upcoming key events (London Time)
No major events for the day.
What happened lately
In Japan, the national Consumer Price Index (CPI) inflation data shows mixed results. The CPI inflation rate excluding food and energy modestly increased to 2.6% in February from 2.5% in January. However, the overall national CPI inflation rate, as well as the rate excluding fresh food, has decreased over the same period, signaling a slight easing of inflationary pressures. The general CPI inflation reduced from 4% in January to 3.7% in February, and the inflation excluding fresh food lowered from 3.2% to 3%. Meanwhile, Japan’s trade balance has shown a notable improvement, with the adjusted merchandise trade balance increasing to 182.3¥ in February from a deficit of 856.6¥ in January, and total trade balance figures rising to 584.5¥, indicating strengthening export activity. Exports showed a significant increase to 11.4% in February from a revised 7.3% in January, while imports notably decreased to -0.7% from 16.2%, suggesting a healthier trade scenario.
In the United States, there is a slight increase in initial unemployment claims, rising to 223,000 in the week ending 15 March. This reflects a modest uptick in jobless claims when compared to the previous week’s figure of 220,000. Furthermore, the U.S. Manufacturing Business Outlook Survey showed a decline, dropping to 12.5 points in March from 18.1 points in February, indicating a potential slowdown in the manufacturing sector. Interest rate projections from the Federal Reserve have shown a decrease, with the first-year rates dropping to 3.4% from 3.9%, and the second-year projections also dipping to 3.1% from 3.4%. The Federal Funds Rate remains unchanged at 4.5%, maintaining borrowing costs.
The USDJPY currency pair’s dynamics may be influenced by these economic indicators. The slight easing in Japanese inflation combined with an improvement in trade balance underscores an economic resilience, potentially offering some support to the yen. Conversely, the uptick in U.S. jobless claims, coupled with declining manufacturing outlooks and lower interest rate projections, suggests weaker economic momentum for the dollar. As a result, downward pressure on USDJPY is observed, with the yen gaining modest strength against the dollar. Given these conditions, the lack of major upcoming events may maintain the current pressure on the USDJPY pair in the near term.
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What can we expect from USDJPY today?
USDJPY on Thursday dropped -0.26% to 148.41. 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 148.21 (S1) with break below could see further selling pressure towards 148.01 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 148.87 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 148.34 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 | 149.28 |
| R2 | 149.08 |
| R1 | 148.75 |
| Daily Pivot | 148.54 |
| S1 | 148.21 |
| S2 | 148.01 |
| S3 | 147.68 |