USD/JPY Price Analysis – May 12, 2023
Daily Price Outlook
After a three-day streak of gains, the USD/JPY currency pair has dropped below 135.00, moving away from the 20-day and 100-day exponential moving averages (EMAs) located at 134.53 and 134.24, respectively. This decline can be attributed to the decrease in US inflation. The relationship between USD/JPY and the fall in the US 10-year Treasury bond yield is also taken into consideration. As of the time of this report, USD/JPY is trading at 134.22, down 0.73%.
The dovish sentiments expressed in the Bank of Japan's (BoJ) monthly statement do not fully explain the bearish trend in USD/JPY, as the currency pair continues to hover near its weekly lows around 133.90. The decline in USD/JPY is influenced by the overall weakness of the US dollar, which is accompanied by cautious optimism and lower returns on Treasury bonds.
The US Dollar Index (DXY) has fallen for the second consecutive day and is currently trading around 101.35. This decline comes as US inflation dropped below 5.0% for the first time in two years. However, the US inflation data was not as concerning as expected and it seems to have supported the Federal Reserve (Fed) in postponing any rate-cut actions until September 2023, according to Fed Fund Futures.
In April, the US Consumer Price Index (CPI) registered a year-on-year decrease to 4.9%, in line with market estimates of 5.0% inflation. This marks the first reading below 5.0% in two years. On a month-on-month basis, the CPI data met the positive projection of 0.4% and reached 0.1%.
The US 10-year and two-year Treasury bond rates experienced a four-day decline, resulting in the largest daily drop in a week, as concerns about economic slowdown increased demand for US bonds. However, the benchmark US bond rates remain under pressure, fluctuating between 3.42% and 3.91% at the time of this report.
In other news, US policymakers were unable to reach an agreement on the debt ceiling during their initial attempt on Wednesday. Nevertheless, discussions have commenced, and another attempt will be made on Friday, which has boosted market optimism. Furthermore, the absence of significant negative factors in the banking sector, along with strong earnings and generally weaker US data, has alleviated concerns within the banking industry.
USD/JPY – Technical Outlook
The USDJPY tried to drop below the bullish channel's support line, but ultimately ended the day above the line. This may bode well for the day's trading, and may even portend a continuation of the anticipated upward trend. Our bias remains optimistic, with 135.35 and 137.70 as our next primary targets.
If the price drops below the support level at 134.25, it may test the crucial support level at 133.30 before making another attempt to rise.
Today's trade might go either way between the 133.90 support level and the 135.50 resistance level.
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USD/JPY Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
* USD/JPY experienced a sharp bearish trend during the Asian session, dropping to 134.50, with the formation of three black crows on the four-hour timeframe.
* The pair completed a 61.8% Fibonacci retracement around 134.83, suggesting further downside potential if the candle closes below this level.
* The USD/JPY could target the 78.6% Fibonacci retracement level at 134.065; if candles close above, it may trigger an upward movement, with immediate resistance at 134.83 and potential targets of 135.45 or 136.
During the Asian session, the USD/JPY traded with a sharp bearish trend, having dropped to 134.50. At present, when examining the four-hour timeframe, the USD/JPY has formed solid bearish candles, which are essentially three black crows, suggesting a dominant bearish sentiment in the market today.
On the four-hour chart, we can observe that the USD/JPY pair has completed a 61.8% Fibonacci retracement around the 134.83 level. The closing of the candle below this particular level indicates that there is more downside potential today.
With that in mind, the USD/JPY has the potential to target the 78.6% Fibonacci retracement level, which is marked around 134.065. The closing of candles above this specific level could potentially trigger a new upward movement in the currency rate today.
On the upside, an immediate resistance is observed around the 134.83 level, and a bullish break above this level may lead the Japanese yen towards 135.45 or 136.
USD/JPY - Trade Idea
Entry Price – Buy Limit 134
Stop Loss – 133
Take Profit – 136
Risk to Reward – 1 : 2
Profit & Loss Per Standard Lot = +$1,487/ -$743
Profit & Loss Per Micro Lot = +$148/ -$74
USD/JPY Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
* USDJPY exhibiting strong bullish bias, crossing above the 150-day moving average at 134.250
* Technical indicators, such as RSI and MACD, support an upward trend continuation; potential target at 135.100 and possibly 136.050
* Suggested strategy: buying position above 134.250 with targets at 135 or 136.050
On Friday, the USDJPY currency pair is exhibiting a strong bullish bias, surging to the 134.800 level. On the four-hourly timeframe, the USDJPY currency pair crossed above the 150-day moving average, which was providing major resistance around the 134.250 level.
Moreover, the USDJPY currency pair has formed a bullish engulfing pattern, suggesting a strong bullish sentiment among investors. At the same time, there is an upward trendline that also supports a buying trend in the pair today.
Leading technical indicators, such as RSI and MACD, are situated in the buying zone, further supporting the likelihood of an upward trend continuation.
With this in mind, the USDJPY has the potential to target the 135.100 level, and the increased demand for this particular currency pair may allow it to break through the 135.100 level and reach the 136.050 resistance level.
On the downside, support continues to hold around 134. The suggested strategy is to look for a buying position today above the 134.250 level, with a target of 135 or 136.050.
USD/JPY – Trade Ideas
Entry Price – Buy Above 134.183
Stop Loss – 133.037
Take Profit – 136.029
Risk to Reward – 1 : 2.5
Profit & Loss Per Standard Lot = +$184/ -$114
Profit & Loss Per Micro Lot = +$18/ -$11
USD/JPY Price Analysis – March 31, 2023
Daily Price Outlook
The USD/JPY is trading at 133.16, up by 0.36% in 24 hours. The release of Japan's economic figures related to the labor market, retail demand, and Tokyo CPI has resulted in a substantial upward movement for the currency pair.
Moreover, as concerns about additional bank collapse fade, the Japanese Yen, one of the global safe-haven assets, is moving downward versus the US dollar.
US GDP Plunges, Pushing USD/JPY Lower
The final estimate of the US GDP for the fourth quarter of 2022 decreased marginally from 2.7% to 2.6%, down from the Q3 print of 3.2%. Also, according to US data issued on Thursday, the unemployment claims from the previous week rose to 198K, more than expected, pointing to a softening labor market. The data supports the argument for a softer Fed attitude.
Meanwhile, as markets continued to minimize the chance of additional rate rises, the US Dollar Basket (DXY), a gauge of USD performance, fell to 102.17 after the GDP report release.
On Friday, the core PCE price index, which the Fed prefers to use as a gauge of inflation, will be issued. The index will provide more details on the state of the leading economy in the world. Furthermore, it may offer more support for the USD/JPY pair.
Tokyo Inflation Slowdown, Weakening JPY
Inflation in Tokyo continued to drop in March after a strong decline in February, caused by government subsidies for electricity costs.
According to statistics from the Statistical Bureau, Tokyo's Core CPI has increased by 3.2% in the 12 months ending in March, above forecasts for growth of 3.1% but falling short of the previous month's figure of 3.3%. Tokyo's CPI rose 3.3% overall in March, slightly down from the 3.4% increase recorded in February.
Steady inflation indicates that the Bank of Japan's (BoJ) aim to keep inflation consistently at desired targets remains unaffected. It might ensure the likelihood of ending the ultra-loose monetary policy.
Nonetheless, retail demand in Japan remained strong in February. Yearly Retail Sales data has increased significantly from an estimated 5.8% to 6.6%. The BoJ's policymakers and the Japanese government are concerned that factors outside of domestic demand are primarily responsible for inflationary pressures in Japan. However, retail demand right now might ease some concerns.
Moreover, the dismal labor market statistics are the driving force behind the Japanese Yen's recent decline. Compared to the consensus and the previous announcement of 2.4%, the unemployment rate has jumped to 2.6%.
Safe haven USD/JPY rises as Japan's rising unemployment rate demands the continuation of the BoJ's loose policy.
USD/JPY Intraday Technical Levels
Support Resistance
132.52 133.57
131.84 133.94
131.46 134.62
Pivot Point: 132.89
USD/JPY – Technical Outlook
The USD/JPY pair has been exhibiting tight sideways fluctuations since yesterday, hovering around the 133.30 level and maintaining its position below it for now. This sustains the likelihood of resuming the primary bearish trend, with initial targets at 131.60 followed by 130.40.
The price requires a negative impetus to help it achieve the anticipated decline. Notably, breaking below 132.00 would facilitate reaching the desired targets, while surpassing 133.30 would introduce a positive factor, pushing the price towards an intraday and short-term increase.
Today's expected trading range is between 131.90 support and 133.50 resistance.
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USD/JPY Price Analysis – March 10, 2023
Daily Price Outlook
The USD/JPY currency pair is trading at 136.50, up 0.26% in the last 24 hours. The Bank of Japan's dovish stance and concerns over rising US interest rates have declined the Japanese yen.
US Initial Jobless Claims Increase, Driving Down Dollar Value
The US Initial Jobless Claims for the week ended on March 4th showed a significant increase to 211K, the highest since January, compared to the expected 195K and the previous 190K. The markets remain apprehensive due to mixed US data and growing concerns about inflation.
The higher-than-expected unemployment claims have caused a decrease in the dollar's value, with the DXY trading lower at 105.20.
Currently, investors are waiting for positive changes in the nonfarm job market, average hourly wage, and unemployment rate, as these factors are expected to boost the value of the US dollar.
The Bank of Japan's Dovish Stance
Last week, Kazuo Ueda, the upcoming Bank of Japan (BoJ) Governor, declared that he would continue with the accommodative monetary policies implemented by his predecessor, Haruhiko Kuroda. Ueda stated that the Japanese economy has not yet fully recovered and requires sustained support.
Recently released data shows that the Japanese economy avoided a recession in the fourth quarter of 2022. The report indicates that the GDP remained unchanged in Q4 2022, falling short of economists' predictions of 0.2% growth.
According to reports, Kazuo Ueda, the next Governor of the Bank of Japan (BoJ), is expected to maintain the bank's ultra-dovish position in the short term during today's policy meeting. However, experts predict a shift in the bank's stance later this year.
The BoJ decided to keep interest rates at record lows on Friday, stating that it would maintain its current pace of yield curve control (YCC) as it deals with a severe slowdown in the Japanese economy and pursues a leadership change. The central bank retained its short-term and long-term policy interest rates at -0.1% and 0%, respectively.
The bank also stated that it would keep the volatility in 10-year bond rates at 0.5% to negative 0.5% and maintain the pace of quantitative easing at its present level, with no surprises before a change in its top executives.
As a result of the Bank of Japan's dovish outlook, the Japanese yen dropped sharply, losing ground against the US dollar and boosting the momentum of the USD/JPY currency pair.
USD/JPY Intraday Technical Levels
Support Resistance
135.60 137.03
135.06 137.92
134.17 138.46
Pivot Points:136.49
USD/JPY – Technical Outlook
The USD/JPY pair tested the bullish channel's support line yesterday, causing downward pressure. However, today the pair is trading above the line, indicating a higher possibility for a bullish trend to resume shortly, with the initial objective being the 137.70 level.
Although stochastic signals are currently positive, the price is supported by the EMA50 from below, further increasing the likelihood of a projected bullish trend.
If the price breaks below 136.30, it could result in downward pressure and end the predicted advance. The trading range for today is expected to be between 135.90 - 137.50.
USD/JPY Price Analysis – March 07, 2023
Daily Price Outlook
The USD/JPY pair is currently trading around 136.00. Investors are closely watching Federal Reserve Chair Jerome Powell's speech for any indications about US monetary policy, causing the pair to remain within a narrow trading range.
Jerome Powell's Upcoming Speech: What to Expect and Its Potential Impact on the Markets
Investor sentiment remains positive towards the US economy despite a tight labor market, rising inflation, and strong service sector activity. However, concerns remain about the vulnerability of the industrial industry.
A recent report indicated a 1.6% decline in factory orders in January, slightly better than the expected decline of 1.8%. Excluding transportation, factory orders rose by 1.2%.
Following the recent report, the US Dollar Index dropped below 104.30, and the softer USD kept the USD/JPY pair in check. Market participants are now waiting for crucial events, including Fed Chair Jerome Powell's speech on Tuesday and the NFP data release on Friday, for more insight into monetary policy.
Jerome Powell, the head of the Federal Reserve, is scheduled to deliver a speech to Congress where he is expected to provide an update on the status of the US economy and the central bank's monetary policy plans.
Analysts predict that Powell may suggest that recent economic data may require higher interest rates than expected. Investors will be closely monitoring Powell's remarks as any hawkish indications he provides could lead to market volatility.
BoJ Policy Meeting in Focus as Markets Await Key Announcements
In Japan, there has been a concerning drop in real wages in January, with the worst decline seen in over nine years. Data revealed that all cash wages only increased by 0.8% year over year in January, which is significantly lower than the 4.1% growth seen in December.
The Bank of Japan's (BoJ) monetary policy is focused on wage growth, and Governor Kuroda has stated that he will not tighten monetary policy until there is evidence that wage growth, rather than external factors such as commodity prices, is the primary driver of inflation.
Furthermore, Governor Kuroda is set to step down after the BoJ policy meeting on March 10. Many speculate that he will use this opportunity to start policy normalization by revising the Yield Curve Control (YCC).
Despite the recent decline in the USD/JPY pair, yen buyers remain optimistic due to speculations that Kuroda will make significant moves before his departure.
USD/JPY Intraday Technical Levels
Support Resistance
135.52 136.32
135.04 136.66
134.71 137.13
Pivot: 135.85
USD/JPY – Technical Outlook
The USD/JPY pair remained steady around the EMA50, with no significant movements since yesterday. The bearish trend scenario remains unchanged, pending a breakout from the correctional bullish channel. The pair is expected to visit levels of 134.55 and 133.30.
The Stochastic indicator shows a loss of positive momentum, supporting the expected decline. Breaking above 136.45 could lead to a rise toward the 137.70 level before further direction is determined.
Today's support level is 135.00, while the resistance level is 136.50.
USD/JPY Price Analysis – March 03, 2023
Daily Price Outlook
The USD/JPY pair is currently trading at $136.66. Raphael Bostic, the president of the Atlanta Federal Reserve, made some cautious comments that appear to have briefly halted the pair's upward momentum.
Jobless Claims Report and Bostic's Comments Affect US Economy and USD/JPY
On Thursday, the jobless claims report indicated a further decline in the number of Americans filing new unemployment claims, reaching 190K instead of the expected 196K. This suggests a continuing improvement in the labor market and may reduce the likelihood of the Fed raising interest rates.
Earlier in the day, the US Dollar was gaining strength. Still, it changed direction in the afternoon when Atlanta Federal Bank President Raphael Bostic said the tightening cycle could end mid-to late-summer. Bostic prefers a rate increase of 25 basis points in March, but he left the possibility of a more hawkish rate outlook if inflation and labor market statistics improve.
As a result, the US Dollar Index (DXY) is now under pressure and trading at 104.89. Later today, the US Institute of Supply Management (ISM) will release the Services PMI (Feb) data, which could significantly impact the US Dollar's movement.
Tokyo Inflation Decreases in February: First Drop in Over a Year
The inflation rate in Tokyo has dropped for the first time in over a year, but this masks a stronger pricing trend that will likely influence the policy decisions of Bank of Japan Governor Nominee Kazuo Ueda. Despite the decrease in February's annual inflation rate from 4.4% to 3.4%, and the core inflation rate from 4.3% to 3.3%, it is unlikely to pressure the Bank of Japan to reconsider its policy outlook.
The recent drop in Tokyo's inflation rate, a leading indicator for the country, suggests that the peak of price growth may have passed in January. However, the new Bank of Japan (BoJ) board supports the current monetary policy. While Kazuo Ueda, the new BoJ Governor nominee, may consider phasing out Yield Curve Control, it could lead to increased optimism for the Japanese Yen.
USD/JPY Intraday Technical Levels
Support Resistance
136.15 137.25
135.53 137.73
135.05 138.34
Pivot Points:136.63
USD/JPY – Technical Outlook
Due to stochastic negativity, the USD/JPY pair experienced a temporary decline after reaching the 137.00 level. However, positive signals emerge, indicating a potential resumption of the bullish trend within the upward channel shown on the chart. The EMA50 currently supports the projected bullish wave, which is dependent on the price of above 135.40.
A break below this level could end the positive scenario and push the price down to test the 133.30 regions. The trading range for today is expected to be between 135.60 support and 137.30 resistance.