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.