Usd/jpy drops 1.08% to 142.06 amid anticipation of us economic data releases

USDJPY Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-1.08%	-155.8 Pips
Week to-date	-0.99%	-141.8 Pips
April	-5.15%	-771.4 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)
Wed 01:30 PM USD GDP annual rate

What happened lately

The US economy is set to disclose two significant economic indicators on Wednesday, which are expected to have substantial implications for the financial markets. The Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy, will offer critical insights into inflationary trends within the country. A rise in this index might indicate increasing inflationary pressures, potentially influencing the Federal Reserve’s monetary policy stance. Concurrently, the Gross Domestic Product (GDP) annual rate is poised for release, providing a valuable gauge of the country’s economic growth. A robust GDP figure could allay recessionary fears, instill investor confidence, and potentially lead to adjustments in fiscal and monetary strategies.

Japan remains devoid of any forthcoming critical economic events that might immediately influence the market dynamics. As a result, the focus remains predominantly on external factors, especially those emanating from its key economic counterpart, the United States. Any significant developments or outcomes related to the US economic releases are anticipated to resonate across Japanese financial markets, notably affecting investor sentiment and potential currency valuations.

The recent drop in USDJPY, with the pair declining by 1.08% to settle at 142.06, underscores the present volatility within the currency market. This descent could primarily be attributed to internal US economic anticipations or broader market sentiment fluctuations. If Wednesday’s US PCE Price Index indicates rising inflation, investors might brace for a more hawkish Federal Reserve, which could enhance the appeal of USD as a higher-yielding currency, thereby strengthening it against the JPY. Conversely, if the GDP figures surpass expectations, portraying a thriving economy, it could similarly boost USD’s attractiveness. Ultimately, the forthcoming economic data releases are poised to play a pivotal role in dictating the short-term trajectory of the USDJPY, as traders and investors finely calibrate their positions based on perceived economic strengths and monetary policy outlooks.

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What can we expect from USDJPY today?

USDJPY on Monday dropped -1.08% to 142.06. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDJPY looks bearish as the pair posted lower in Monday trading session.

Looking ahead for the day, immediate support level is at 141.38 (S1) with break below could see further selling pressure towards 140.7 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 143.89 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 141.95 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: