Technical Analysis

USD/JPY Price Analysis – March 07, 2023

By LonghornFX Technical Analysis
Mar 7, 20233 min

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 Price Chart - Source: Tradingview

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.



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