USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | -0.87% | -133.9 Pips |  |
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| Week to-date | -0.69% | -106.2 Pips |  |
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| October | 5.69% | 817.999 Pips |  |
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Upcoming key events (London Time)
Fri 12:30 PM USD Nonfarm Payroll Employment
What happened lately
In the United States, a mix of positive and negative economic indicators has been reported. Personal Income rose to 0.3% in September, indicating sustained consumer earning capacity. Meanwhile, key inflation indices like the PCE Price Index showed a decline in the 12-month change to 2.1% from 2.2% in August, while the monthly increase was from 0.1% to 0.2%. Excluding food and energy, PCE prices rose to 0.3% in September from 0.2% in August, while the 12-month index remained flat at 2.7%. Consumer spending showed a decrement in revised figures for September from a 0.3% increase to 0.2%. There’s also a notable drop in initial unemployment claims to 216K, suggesting strengthening labor market conditions. However, the U.S. GDP growth for Q3 saw a slight decrease to 2.8% from 3.0% in Q2, and the Employment Cost Index fell to 0.8% from 0.9%. Pending home sales saw a significant increase to 7.4% in September from 0.6% in August, despite mixed signals from PCE prices and GDP indices.
In Japan, interest rates remain unchanged at 0.25%, maintaining a stable monetary policy stance. Yet, retail indicators indicate weakening consumer activity, with September figures showing a decrease in retail trade at -2.3% compared to a 1% increase previously. Similarly, large retailer sales dropped to 2% from 5% in August. This trend is indicative of potentially contracting domestic demand which could influence economic growth negatively.
Considering the economic data from both the U.S. and Japan, the USD/JPY currency pair is susceptible to the influence of these reports. The decline in U.S. GDP growth, amidst stable inflation and labor data, could induce expectations of a softened monetary tightening stance from the Federal Reserve. This, coupled with weaker Japanese economic indicators, may support a stronger USD against JPY in the near term. However, the market response noted, where USD/JPY saw a slight decline, could be a reaction to possible dovish interpretations of U.S. data. Anticipation for the U.S. nonfarm payroll data could further drive fluctuations as traders look for clues on future monetary policy direction, keeping USD/JPY movements dynamic.
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What can we expect from USDJPY today?
USDJPY on Thursday dropped -0.87% to 151.89. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDJPY looks bearish as the pair posted lower in Thursday trading session.
Looking ahead for the day, immediate support level is at 151.25 (S1) with break below could see further selling pressure towards 150.61 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 153.62 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 151.79 would indicate selling pressure.
For the week to-date, take note that USDJPY is mixed as compared to prior week.
USDJPY ended month of October trading session up by 5.69% or 817.999 pips higher.
Key levels to watch out:
| R3 | 154.89 |
| R2 | 154.25 |
| R1 | 153.07 |
| Daily Pivot | 152.43 |
| S1 | 151.25 |
| S2 | 150.61 |
| S3 | 149.43 |