"USD/JPY: Japanese Yen Halts Decline, Eyes US CPI Data"
The Japanese Yen regained positive momentum in the Asian trading session on Tuesday. USD/JPY partially eroded some of the strong recovery seen in the past two days. Investors are awaiting the US Consumer Price Index (CPI) for fresh impetus ahead of the FOMC meeting on Wednesday.
From a technical standpoint, USD/JPY showed a certain degree of recovery last week at the crucial 200-day Simple Moving Average (SMA). The subsequent move exceeded the 23.6% Fibonacci retracement of the recent decline from the vicinity of 152.00, or the YTD high, supporting bullish sentiments. However, the sharp rise during the day halted near the 200-hour SMA, now closing around the 146.50 level. This area will now play a crucial pivot point, and clearing it would allow the price to test the 50% Fibonacci level, around 146.80, and reclaim the 147.00 milestone.
Meanwhile, oscillators on the daily chart are deep in positive territory, supporting the potential for some upward action at higher levels. This suggests that the resistance at the 100-hour SMA, around 145.85, may now act to defend the downside just ahead of the psychological level of 145.00. Further selling pressure could push USD/JPY back towards the intermediate support zone of 144.55-144.50 on the way to the 144.00 mark. A convincing break below this level would be considered a strong bearish catalyst, paving the way for deeper losses.
On the other hand, the Japanese Yen (JPY) extends its downward trend for the second consecutive day, pushing the USD/JPY pair towards the 146.00 level during the European trading session on Monday. A report on Friday suggested that comments from Bank of Japan (BoJ) Governor Kazuo Ueda last week were misunderstood, and the central bank will maintain the status quo until positive wage inflation begins. This comes alongside weaker-than-expected GDP reports from Japan, indicating the domestic economy remains fragile and expectations of imminent rate hikes may be inflated.
Conversely, the US Dollar (USD) attracts some renewed buying interest after betting on an early Federal Reserve (Fed) policy easing was scaled back, proving to be another supportive factor for the USD/JPY exchange rate. Friday's closely watched US employment figures showed a rapid growth pace in November, with the unemployment rate dropping to 3.7%. This indicates signs of underlying strength in the labor market and suggests that current market pricing for a rate cut in March 2024 may be premature.
The recent sharp upward move seen around the USD/JPY pair in the past hour may be attributed to some technical buying based on sustained strength beyond the 100-hour Simple Moving Average (SMA). This suggests that concerns about a deeper global economic downturn and geopolitical risks may limit losses for the safe-haven JPY and restrict any further upside moves for the currency. Traders may also limit strong bets ahead of this week's significant event/data risks - US Consumer Price Index on Tuesday and the crucial FOMC policy decision on Wednesday."
From a technical standpoint, USD/JPY showed a certain degree of recovery last week at the crucial 200-day Simple Moving Average (SMA). The subsequent move exceeded the 23.6% Fibonacci retracement of the recent decline from the vicinity of 152.00, or the YTD high, supporting bullish sentiments. However, the sharp rise during the day halted near the 200-hour SMA, now closing around the 146.50 level. This area will now play a crucial pivot point, and clearing it would allow the price to test the 50% Fibonacci level, around 146.80, and reclaim the 147.00 milestone.
Meanwhile, oscillators on the daily chart are deep in positive territory, supporting the potential for some upward action at higher levels. This suggests that the resistance at the 100-hour SMA, around 145.85, may now act to defend the downside just ahead of the psychological level of 145.00. Further selling pressure could push USD/JPY back towards the intermediate support zone of 144.55-144.50 on the way to the 144.00 mark. A convincing break below this level would be considered a strong bearish catalyst, paving the way for deeper losses.
On the other hand, the Japanese Yen (JPY) extends its downward trend for the second consecutive day, pushing the USD/JPY pair towards the 146.00 level during the European trading session on Monday. A report on Friday suggested that comments from Bank of Japan (BoJ) Governor Kazuo Ueda last week were misunderstood, and the central bank will maintain the status quo until positive wage inflation begins. This comes alongside weaker-than-expected GDP reports from Japan, indicating the domestic economy remains fragile and expectations of imminent rate hikes may be inflated.
Conversely, the US Dollar (USD) attracts some renewed buying interest after betting on an early Federal Reserve (Fed) policy easing was scaled back, proving to be another supportive factor for the USD/JPY exchange rate. Friday's closely watched US employment figures showed a rapid growth pace in November, with the unemployment rate dropping to 3.7%. This indicates signs of underlying strength in the labor market and suggests that current market pricing for a rate cut in March 2024 may be premature.
The recent sharp upward move seen around the USD/JPY pair in the past hour may be attributed to some technical buying based on sustained strength beyond the 100-hour Simple Moving Average (SMA). This suggests that concerns about a deeper global economic downturn and geopolitical risks may limit losses for the safe-haven JPY and restrict any further upside moves for the currency. Traders may also limit strong bets ahead of this week's significant event/data risks - US Consumer Price Index on Tuesday and the crucial FOMC policy decision on Wednesday."
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