USDJPY Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | 0.48% | 67.599 Pips |  |
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| Week to-date | 1.28% | 180.401 Pips |  |
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| September | -1.58% | -229.6 Pips |  |
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Upcoming key events (London Time)
Fri 04:00 AM JPY Bank of Japan Short-Term Policy Interest Rate
What happened lately
In the United States, several significant economic indicators have shifted. The Federal Reserve has updated its interest rate projections, lowering the year-end rate for the first year to 3.4% from 4.1%, and for the current year to 4.4% from 5.1%. Additionally, the second-year projection has dipped from 3.1% to 2.9%, while the longer-term projection slightly increased to 2.9% from 2.8%. The Fed’s interest rate decision also accompanied this, showing a reduction to 5% from the prior 5.5%. Building permits and housing starts demonstrated positive trends, with building permits rising to 1.475 million and housing starts increasing to 1.356 million. However, retail trade experienced a slight downturn, with the retail trade control group decreasing to 0.3% and retail trade excluding automobiles falling to 0.1%. Industrial production showed some recovery, increasing to 0.8% in August from a negative figure in July. These data points suggest a mixed economic outlook, with easing inflationary pressures but slower retail growth.
In Japan, the economic figures presented a decline in several key areas. Export growth in August dropped to 5.6% from 10.2% in July, and import growth decreased sharply from 16.6% to 2.3%. The merchandise trade balance also worsened, with the deficit increasing to -695.3¥ billion from -628.7¥ billion in July. These developments indicate a weakening trade environment, reflective of slowing global demand and potentially dampening economic activity.
The USDJPY exchange rate is likely to be affected by these economic updates. The drop in U.S. interest rate projections and the actual Fed rate reduction to 5% suggest a more dovish stance from the Federal Reserve, which could lead to a weakening of the U.S. dollar. Conversely, Japan’s lower export and import growth, alongside a deeper trade deficit, indicate weaker economic conditions, which could put downward pressure on the yen. This dynamic may result in increased volatility in the USDJPY pair. However, the U.S. economic resilience in housing and industrial production could counterbalance the dovish signals to some extent. Additionally, upcoming decisions from the Bank of Japan (BOJ) could further influence the exchange rate, especially if the BOJ signals any significant policy changes or interventions. Therefore, traders should remain cautious and attentive to these developments as they navigate USDJPY movements.
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What can we expect from USDJPY today?
USDJPY on Wednesday rose 0.48% to 142.56. Price is above 9-Day EMA while Stochastic is rising.
Updated daily direction for USDJPY looks bullish as the pair ended higher after Wednesday trading session.
Looking ahead for the day, immediate upside resistance level is R1 at 143.37 with break above could target R2 at 144.18. While towards the downside, we are looking at daily low of 140.43 as an important support. Break below this level could weaken the current bullish momentum. A break above 142.71 would suggest bullish bias after recent positive movement.
For the week to-date, take note that USDJPY is mixed as compared to prior week.
Key levels to watch out:
| R3 | 145.65 |
| R2 | 144.18 |
| R1 | 143.37 |
| Daily Pivot | 141.9 |
| S1 | 141.09 |
| S2 | 139.63 |
| S3 | 138.82 |