Usd/yen rises on March’s first day, mixed economic signals in focus

USDJPY Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	0.62%	92.2 Pips
Week to-date	0.6%	89.1 Pips
March	0.04%	5.501 Pips

Upcoming key events (London Time)

Tue 12:50 AM JPY Tankan Large Manufacturing Index

What happened lately

In Japan, the Tankan Large Manufacturing Outlook in Q1 experienced a slight decline to 12 points from the previous quarter’s 13. Similarly, the Tankan Large Manufacturing Index fell to 12 points from 14 points in Q4, indicating a cooling in the manufacturing sector. Additionally, the Tankan Large All Industry Capex plummeted significantly from 11.3% in Q4 to 3.1% in Q1, suggesting a reduction in capital expenditure expectations among industries. However, on a positive note, Japan’s unemployment rate improved slightly, decreasing to 2.4% in February from 2.5% in January, reflecting a slight improvement in the labor market conditions. These mixed economic indicators present a subdued yet cautious outlook for Japan’s economic growth.

In the United States, the Chicago Purchasing Managers’ Index rose to 47.6 points in March from 45.5 in February, signaling an improvement in the manufacturing sector in the Midwest region, although it remains below the neutral 50-mark which separates expansion from contraction. This increase may indicate an improving trend in business conditions and sentiment within the American manufacturing sector, contributing to a potentially more robust economic outlook.

The slight rise in USDJPY to 150.07, with an overall increase by 0.04% in March, reflects the interplay of these economic data points. The weakness in Japan’s manufacturing indices and capital expenditure outlook, contrasted with a modest improvement in the U.S. manufacturing sector, aligns with this trend. The strength in the U.S. economic indicators and the relative weakness in Japan might contribute to an appreciation of the U.S. dollar against the Japanese yen, as investors perceive a more favorable economic environment in the United States. Going forward, the upcoming release of Japan’s Tankan Large Manufacturing Index will be closely monitored and could further impact the USDJPY dynamics depending on the results. The anticipation of this data might lead to increased volatility in USDJPY as investors react to the new information.

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What can we expect from USDJPY today?

USDJPY on Monday rose 0.62% to 150.07. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for USDJPY looks bullish as the pair ended higher after Monday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 150.66 with break above could target R2 at 151.25. While towards the downside, we are looking at daily low of 148.70 as an important support. Break below this level could weaken the current bullish momentum. A break above 150.27 would suggest bullish bias after recent positive movement.

For the week to-date, take note that USDJPY is mixed as compared to prior week.

USDJPY ended month of March trading session up by 0.04% or 5.501 pips higher.

Key levels to watch out: