USDJPY on Friday dropped -1.7% to 146.52. Week ending 2024-08-02 moved lower by -4.94%. What you need to know.

USDJPY Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-1.7%	-253.801 Pips
Week 242024-08-02	-4.94%	-762.001 Pips
August	-2.15%	-322.5 Pips

Upcoming key events for the new week (London Time)

Thu 01:30 PM Initial Unemployment Insurance Claims

What happened over the week

In the United States, several economic indicators have shown signs of weakening. U.S. Factory Orders in June dropped to -3.3%, a significant decline from -0.5% in May, according to the Census Bureau. The Bureau of Labor Statistics reported that Average Hourly Earnings in July decreased to 0.2% from 0.3% in June. Additionally, U.S. nonfarm payroll employment in July was 114,000, a decrease from the revised figure of 179,000 in June. The Q2 flash estimate for U.S. unit labor costs showed a notable decline to 0.9%, down from 4% in Q1, while Nonfarm Business Labor Productivity in Q2 saw an improvement to 2.3% from 0.2% in Q1. Initial Unemployment Insurance Claims for the week ending July 27 rose to 249,000 from 235,000 the previous week. The Federal Reserve maintained the Federal Funds Rate at 5.5%. The Employment Cost Index (ECI) in Q2 decreased to 0.9% from 1.2% in Q1. The Job Openings and Labor Turnover Survey (JOLTS) reported 8.184 million job openings in June, slightly down from May. The U.S. House Price Index for May remained flat at 0%, down from 0.3% in April.

In Japan, the Bank of Japan raised the Short-Term Policy Interest Rate to 0.15% from 0%. Large retailer sales in June increased to 7%, up from 4% in May, as reported by METI. The Retail Trade (12-mth) for June rose to 3.7%, an improvement from 3% in May. However, seasonally adjusted retail trade for June decreased to 0.6% from 1.7% in May. Japan’s unemployment rate dropped to 2.5% in June, an improvement from 2.6% in May, according to the Statistics Bureau of Japan.

The combination of weakening economic data from the United States, including a drop in factory orders, lower hourly earnings, a decrease in nonfarm payrolls, and a rise in initial unemployment claims, suggests a slowing U.S. economy. Conversely, Japan’s economic indicators show some signs of strength with better retail sales and a lower unemployment rate. The divergence in economic performance coupled with the unchanged Fed rate and the Bank of Japan’s interest rate hike suggests a stronger Japanese yen relative to the U.S. dollar, contributing to the USDJPY dropping by -1.7% to 146.520 on Friday, with a weekly decline of -4.94%. Such trends indicate a potential shift in investor confidence towards the Japanese yen amidst perceived economic weaknesses in the U.S. economy.

From social media

🇯🇵 The Bank of Japan increased its short-term policy interest rate to 0.15% from 0%, after the news resulting in the USD/JPY exchange rate dropping 58.7 pips, or 0.382%, to 153.00 and recording a 101.9-pip range.

The market is likely to react with a stronger yen as a result of… https://t.co/CvqdaGtxFZ

— Market Recap (@forexforum) July 31, 2024

What can we expect from USDJPY for the new week and what happened on Friday?

USDJPY on Friday dropped -1.7% to 146.52. Price is below 9-Day EMA while Stochastic is falling. For the week ending ,2024-08-02, the pair dropped -4.94% or -762.001 pips lower.

Looking ahead, USDJPY looks bearish as the pair posted lower in Friday trading session.

For the new week, our technical outlook looks bearish, immediate support level is at 143.56 (WS1) with break below could see further selling pressure towards 140.60 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 155.19 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 146.41 would indicate selling pressure.

For the month of August, USDJPY is down by -2.15% or -322.5 pips lower.

Weekly key levels to watch out:

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