USD/JPY Price Analysis – Nov 28, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair is seeing a modest rise as US dollar gained traction, supported by a slight increase in US Treasury bond yields.
However, the recent US economic data has shown that the economy remains resilient, with inflation progress slowing down.
This has led to expectations that the Federal Reserve might hold off on further rate cuts, which is boosting demand for the US Dollar. The uptick in bond yields is also helping the greenback gain strength, putting pressure on the lower-yielding Japanese Yen.
On top of this, a generally positive market sentiment is driving investors away from the safe-haven JPY, further supporting the USD/JPY's climb.
However, concerns about US President-elect Donald Trump’s tariff plans, geopolitical tensions like the ongoing Russia-Ukraine conflict, and speculation that the Bank of Japan (BoJ) might raise interest rates in December are providing some support for the Yen.
Traders are also staying cautious, awaiting Tokyo’s consumer inflation figures on Friday before making new moves.
Japanese Yen Strengthens on Inflation Data and BoJ Rate Hike Expectations, Pressuring USD/JPY
On the JPY front, Japan's Consumer Price Index (CPI) and steady corporate service inflation are giving confidence to Bank of Japan (BoJ) Governor Kazuo Ueda’s view that the economy is moving towards sustained, wage-driven inflation. This has kept the possibility of another interest rate hike by the BoJ in December on the table.
As a result, the Japanese Yen has strengthened, reaching a five-week high against the US Dollar on Wednesday. This rise in the Yen is also supported by concerns over trade wars, making the Yen a more attractive safe-haven currency during uncertain times.
Meanwhile, Japan's parliament has started an extraordinary session. Prime Minister Shigeru Ishiba's minority government is aiming to pass a supplementary budget to support households struggling with inflation.
The government is also working on revising laws related to political funds to address ongoing economic challenges.
Therefore, the strengthening Japanese Yen, fueled by BoJ's potential rate hike and trade war concerns, is weighing on the USD/JPY pair. This shift towards the Yen as a safe-haven currency has led to a pullback in the USD/JPY pair.
US Dollar Rebounds as Strong Economic Data and Inflation Concerns Support USD/JPY
On the US front, the broad-based US dollar is recovering from a two-week low, supported by a rise in US bond yields. This rebound follows strong economic data that highlighted the resilience of the US economy, including a solid labor market.
On the other hand, the Bureau of Economic Analysis reported that the US economy grew at a 2.8% annualized rate in the third quarter, in line with earlier estimates. Consumer spending also rose by 3.5%, the highest increase this year.
Moreover, the US Department of Labor revealed that new unemployment claims fell to 213,000 for the week ending November 22, down from 215,000 the previous week.
On the other hand, Durable Goods Orders increased by just 0.2% in October, missing the expected 0.5% rise and showing a slowdown compared to the previous month’s revised 0.4% decline.
Furthermore, the Personal Consumption Expenditures (PCE) Price Index, which is closely watched by the Federal Reserve, rose to 2.3% in October from 2.1% in September, while the core PCE also edged up to 2.8%.
Despite these data points, market expectations for a Fed rate cut in December remain, but growing inflation concerns from President Trump's policies are supporting the USD and pushing the USD/JPY pair higher.
USD/JPY – Technical Analysis
USD/JPY is trading at 151.532, up 0.32%, as buyers maintain momentum following recent gains. The 4-hour chart shows immediate resistance at 155.029, with higher targets at 156.740.
A critical pivot point at 153.418 marks the threshold for a potential bullish extension. The 50-day EMA at 153.927 reinforces this resistance zone, suggesting that a sustained break above this level could open the door to further gains.
On the downside, immediate support is located at 150.438, followed by deeper levels at 149.105 and 147.816. The RSI at 33 suggests the pair is nearing oversold conditions, which may limit downside potential in the near term.
However, if USD/JPY falls below 152.105, bearish momentum could accelerate, targeting the support at 150.418.
Traders should remain cautious around the current levels. A sell position below 152.105 could offer opportunities with a take-profit target at 150.418 and a stop-loss at 153.421.
Conversely, a decisive break above the pivot at 153.418 would signal renewed bullish interest, pushing toward 155.029 and beyond.
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