Usdjpy rises 1.63% to 145.28 amid contrasting economic indicators in Japan and the US

USDJPY Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	1.63%	233.1 Pips
Week to-date	1.26%	181.4 Pips
May	1.74%	248.7 Pips

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Fri 01:30 PM USD Nonfarm Payroll Employment

What happened lately

In Japan, the unemployment rate rose to 2.5% in March from 2.4% in February, indicating a slight worsening in labor market conditions. Additionally, Japan’s retail trade data revealed a mixed picture: while seasonally adjusted retail trade fell by 1.2% in March, large retailer sales increased to 3% from 2%. Furthermore, Japanese retail trade for the 12 months up to March significantly improved, rising to 3.1% from a revised 1.3% in February, suggesting a more favorable consumer spending environment over the longer term.

In the United States, there were several notable economic developments. The initial unemployment insurance claims for the week ending April 26 increased to 241,000 from 223,000, signaling a potential softening in the labor market. The PCE Price Index, excluding food and energy, decreased on both a monthly and annual basis, reflecting a moderation in the inflationary pressures. Personal income growth slowed to 0.5% in March from 0.7% in February, but consumer spending increased to 0.7%, suggesting resilient consumer demand. Additionally, pending home sales surged by 6.1% in March. However, the Chicago PMI dropped to 44.6 in April, pointing to manufacturing challenges.

Despite a sharp rise in the GDP Price Index to 3.7% in Q1, the U.S. GDP annual rate fell to -0.3%, highlighting contraction in overall economic output. The Employment Cost Index remained steady at 0.9%, indicating stable wage growth, while certain PCE Price Index measures saw increases on a quarterly basis.

The USDJPY exchange rate climbed by 1.63% to 145.28. This increase can partly be attributed to the differing economic outlooks between the U.S. and Japan. While Japan’s unemployment rate rose slightly and retail trade presented a mixed picture, the U.S. faced a mix of economic challenges, including rising unemployment claims, a decrease in GDP, and conflicting inflationary signals. The relative strength in Japanese retail growth over the 12 months slightly promotes confidence, yet the U.S.’s mixed indicators, specifically weak GDP, could reduce international confidence in the dollar’s short-term strength. This scenario, combined with market expectations for the U.S. nonfarm payrolls, likely contributed to increased demand for the yen, pushing USDJPY higher.

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What can we expect from USDJPY today?

USDJPY on Thursday rose 1.63% to 145.28. Price is above 9-Day EMA while Stochastic is rising.

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

Looking ahead for the day, immediate upside resistance level is R1 at 146.39 with break above could target R2 at 147.5. While towards the downside, we are looking at daily low of 142.88 as an important support. Break below this level could weaken the current bullish momentum. A break above 145.74 would suggest bullish bias after recent positive movement.

For the week to-date, take note that USDJPY is bullish as the pair continued to trade higher and is up by 1.26% over the past few days.

Key levels to watch out: