USD/JPY Price Analysis – Oct 31, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair extended its pullback, trading around the 151.80 level as the Japanese yen gained strength.
This decline follows comments from Bank of Japan (BoJ) Governor Kazuo Ueda, who suggested a potential interest rate hike "if conditions are met."
Although the BoJ kept its benchmark interest rate at 0.25% as expected, Ueda emphasized the Bank's commitment to normalizing its monetary policy. In response to this announcement, the yen appreciated against other currencies, exerting downward pressure on the USD/JPY exchange rate.
Market participants are now turning their attention to upcoming US economic data, especially the release of the Personal Consumption Expenditures (PCE) Prices Index, which is anticipated to reflect ongoing easing of inflation toward the Federal Reserve's 2% target.
Meanwhile, traders are eagerly awaiting Friday's Nonfarm Payrolls (NFP) report, with market consensus indicating a notable decline in job additions. However, strong ADP figures have raised expectations, adding an element of uncertainty to the jobs outlook.
Cautious US Market Sentiment and Economic Data Impact on USD/JPY Outlook
On the US side, the market sentiment remains cautious as investors turned worried amid upcoming data releases. The US Dollar Index (DXY), which measures the dollar's strength against six major currencies, has dipped slightly below 104.00.
Meanwhile, the upcoming Nonfarm Payrolls (NFP) report is projected to show an addition of only 115,000 jobs in October, a decrease from 254,000 in September, while the unemployment rate is expected to remain steady at 4.1%.
Investors are also keeping an eye on the US ISM Manufacturing PMI for October, which is anticipated to show a contraction but at a slower pace, moving from 47.2 in September to 47.6. These data points will likely influence market expectations for the Federal Reserve's interest rate decisions in the coming months.
Therefore, the cautious market sentiment and weaker job growth expectations may lead to a bearish outlook for the USD/JPY pair. However, the slowdown in the NFP and ISM Manufacturing PMI could prompt investors to adjust their positions, affecting the dollar's strength against the yen.
USD/JPY – Technical Analysis
USD/JPY is trading at 152.90, down 0.34% today, indicating a moderate bearish trend as the pair nears critical support levels. The pivot point is situated at 153.26, aligning closely with the 50-day Exponential Moving Average (EMA), which serves as a key resistance.
This confluence suggests that USD/JPY might encounter difficulty moving higher unless market sentiment strongly favors the dollar.
Immediate resistance is noted at 153.05, with subsequent levels at 153.58 and 153.87, potentially capping any recovery efforts. On the downside, immediate support is found at 152.74, followed by deeper levels at 152.50 and 152.28.
A break below these supports could escalate selling pressure, possibly leading to further declines.
The Relative Strength Index (RSI) stands at 40, reflecting subdued momentum. While not in oversold territory, this level implies that selling interest may persist if the pair fails to reclaim the pivot point.
Traders might consider short positions below 153.03, with a target at 152.52 and a stop at 153.42, capitalizing on the prevailing bearish outlook.
Overall, USD/JPY remains pressured below 153.26, supporting a bearish view unless a breakout above this level occurs.
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