Technical Analysis

USD/JPY Price Analysis – Nov 23, 2023

By LonghornFX Technical Analysis
Nov 23, 20233 min

Daily Price Outlook

The USD/JPY currency pair extended its downward trend, falling to around the 149.14 level for the second consecutive day on Wednesday. However, the bearish bias can be attributed to speculations of a hawkish shift in the Bank of Japan's (BoJ) policy stance, benefiting the JPY and putting pressure on the USD/JPY currency pair.

Despite this, the recent release of hawkish Federal Open Market Committee (FOMC) minutes, along with better-than-expected US labor market and consumer sentiment data on Wednesday, provided some support to the US dollar. This helped the USD/JPY pair to limit its deeper losses. However, the gains in the US dollar proved short-lived and temporary, as investors appear convinced that the Federal Reserve (Fed) has ended its policy-tightening campaign and will start cutting rates by May 2024.

Therefore, this belief triggered a fresh decline in US Treasury bond yields, prompting some selling of the US dollar. Consequently, this pressure once again weighed on the USD/JPY currency pair.

USD/JPY Under Pressure Amid Mixed US Economic Signals and Fed's Rate-Cut Speculations

It's worth noting that the Federal Reserve plans to stick with higher interest rates, according to their recent meeting minutes. Meanwhile, the US job market showed resilience, with Initial Jobless Claims dropping to 209,000, the lowest in over a month. This positive jobs data suggests the labor market remains strong amid economic uncertainties.

According to the University of Michigan's survey, consumer sentiment declined for the fourth consecutive month to 61.3 in November. Inflation expectations also rose to 4.5%, marking the highest level since April 2023. Adding to the economic concerns, Durable Goods Orders took a hit, falling by 5.4% in October.

Furthermore, investors are increasingly convinced that the Federal Reserve (Fed) has concluded its cycle of interest rate hikes and may potentially initiate rate cuts as early as May 2024. This belief is contributing to a decline in US Treasury bond yields, prompting some selling of the US Dollar (USD).

Therefore, the USD/JPY pair is under pressure as positive US job data clashes with declining consumer sentiment and signals of potential rate cuts from the Fed. This conflicting of factors is contributing to a subdued market environment.

 USD/JPY Price Chart – Source: Tradingview
 USD/JPY Price Chart – Source: Tradingview

USD/JPY - Technical Analysis

The USD/JPY pair is currently trading at 149.118, experiencing a slight decrease of 0.27%. The pivot point is at 148.5700. Resistance levels are identified at 150.2030, 151.3690, and 152.9430, which could restrict upward price movements.

Support levels are found at 147.5210, 145.9460, and 144.2560, potentially cushioning any downward trends. The RSI stands at 49, indicating a balanced market condition, neither overbought nor oversold.

The MACD value is at 0.207, with the signal at -0.171, hinting at a potential bullish momentum. The 50 EMA is at 149.0450, closely aligned with the current price, suggesting a stable short-term trend.

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