Usdjpy rises amid strong US housing data and anticipation of Japan’s inflation report

USDJPY Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.4%	57.3 Pips
Week to-date	0.74%	104.6 Pips
April	-4.48%	-672.3 Pips

Upcoming key events (London Time)

Fri 12:30 AM JPY Tokyo CPI (Inflation Rate) (12-mth)
Fri 12:30 AM JPY Tokyo CPI excluding fresh food and energy (12-mth)

What happened lately

In the United States, new-home sales have shown a significant increase in March, registering a growth of 7.4% compared to a mere 1.8% increase seen in February. This uptick in sales indicates a robust demand in the housing market, suggesting positive momentum in the U.S. economy. Higher home sales often lead to more construction activity, which in turn can boost employment and consumption as new homeowners spend on various goods and services related to setting up homes. Such economic activities can be indicative of an expanding economy, possibly influencing economic policies, including interest rates, which are closely watched by investors and policymakers alike.

In Japan, upcoming data releases, particularly the Tokyo Consumer Price Index (CPI) readings including the exclusion of fresh food and energy, are highly anticipated. These figures are crucial as they provide insights into the inflationary pressures within the Japanese economy. Expectations around inflation can significantly impact monetary policy decisions by the Bank of Japan, potentially affecting currency valuations.

Regarding the USDJPY rate, the recent rise of 0.4% to 143.12 could be influenced by the strong U.S. housing data which implies an improving U.S. economic landscape. Should the Federal Reserve perceive stronger economic conditions as a signal to consider tightening monetary policy, this could further strengthen the U.S. dollar. Conversely, if the upcoming Japanese inflation data reveals unexpectedly high inflation, it might lead to speculation about potential policy shifts by the Bank of Japan. These factors combined could lead to heightened volatility in the USDJPY pair, as traders weigh the implications of economic data on future policy actions by both the Federal Reserve and the Bank of Japan.

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What can we expect from USDJPY today?

USDJPY on Wednesday rose 0.4% to 143.12. Price is above 9-Day EMA while Stochastic is rising.

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

Looking ahead for the day, immediate upside resistance level is R1 at 143.96 with break above could target R2 at 144.79. While towards the downside, we are looking at daily low of 141.52 as an important support. Break below this level could weaken the current bullish momentum. A break above 143.57 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: