Technical Analysis

USD/JPY Price Analysis – February 24, 2023

By LonghornFX Technical Analysis
Feb 24, 20233 min

Daily Price Outlook

The USD/JPY exchange rate is currently trading at 134.29, reflecting a 0.16% decline over the past 24 hours

Weekly US Unemployment Claims and Preliminary Q1 2023 GDP Report

In the second estimate of the fourth-quarter GDP growth rate report, which was released on February 23, it was reported that GDP expanded by 2.7% quarter-over-quarter, which was slightly below the consensus forecast of 2.9%.

Meanwhile, according to the Labor Department, the number of individuals filing new claims for unemployment benefits decreased unexpectedly in the week ending February 18, falling from 195,000 to a seasonally-adjusted 192,000. Since early January, the number of initial claims for unemployment benefits has remained consistently below 200,000.

Following the release of US economic statistics, the US dollar is fluctuating between gains and losses. The dollar index, which compares the dollar to six important peers, slightly decreased by 0.02% to 104.55.

Expectations for Fed Rate Hikes in 2023

According to the minutes of the FOMC's first policy meeting of the year, all members agreed that additional rate hikes would be necessary to reach the inflation targets. The report did mention that a few participants were in favor of raising rates by 50 basis points, but no further details were provided.

Meanwhile, the standard 10-year US Treasury bond yield saw a minor rebound from daily lows but ultimately closed lower. Traders have acknowledged the possibility of the Federal Reserve continuing its aggressive rate-hike trajectory, which has contributed to a slight increase in the value of the dollar.

Japan's CPI Rises as Expected, Putting Pressure on Bank of Japan

According to statistics released on February 23, the national core consumer price index, which excludes volatile items like fresh food, increased by 4.2% in January, up from 4% in the previous month and in line with market forecasts. In addition, the national CPI inflation, including volatile items, rose to 4.3% in January, compared to 4% in December.

Consumer inflation in Japan rose as expected in January due to higher commodity prices and strong domestic demand. The release of inflation data caused the Yen to strengthen, which put additional pressure on the Bank of Japan to tighten its monetary policy.

The statements of new Bank of Japan (BOJ) Governor Kazuo Ueda are being closely watched. Ueda believes that the BOJ's current policy of monetary easing is appropriate, as inflation has not been able to reach the central bank's 2% target on a regular and steady basis. He believes that retaining an ultra-loose monetary policy is reasonable.

Despite the new governor's defense of the easy money policy, the Japanese Yen continued to strengthen.

 USD/JPY Price Chart - Source: Tradingview

USD/JPY Intraday Technical Levels

Support      Resistance

134.19         135.22

133.75         135.81

133.16         136.25

Pivot Point: 134.78

USD/JPY  – Technical Outlook

The USD/JPY pair is currently receiving immediate support at the 134.400 level and is gaining further support near the 134.380 level. If it breaks below this level, the next support area is around 134, which acted as support on February 20, 2023.

The upward channel signals a bullish bias in the market, with USD/JPY's resistance remaining at 135 or 135.45. Later today, the market will be focused on a speech by MPC Member Tenreyro and US New Home Sales.


    * S&P500 (SPX) Price Analysis – February 23, 2023

    * GBP/USD Price Analysis – February 24, 2023


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