- With the start of trading in the US inflation week, the price of the US dollar against the Japanese yen “USD/JPY” stabilizes around last week’s gains of 155.90 at the time of writing the analysis.
- Recently, the currency pair returned to the levels of Japanese intervention in the Forex currency markets to prevent further collapse of the currency price, which would harm the Japanese economy.
- Clearly, the trend may remain upward until this intervention occurs and until markets and investors react to the announcement of US inflation numbers.
According to fundamental analysis and the results of the economic calendar data, The USD/JPY pair is trading in the wake of a relatively busy period in both markets. On Friday, the preliminary US consumer confidence index for May missed the expected reading of 76 with a reading of 67.4, down from 77.2 in the previous update. Moreover, UoM's preliminary 5-year inflation expectations for this month improved slightly to 3.1%, up from 3%. Prior to that, US initial jobless claims for the week ended May 3 came in below the expected number of claims at 210,000 with a count of 231,000, while continuing claims for the previous week exceeded 1.79 million with 1.785 million.
In Japan, the April Eco Watchers survey beat expectations of 50.4 with a reading of 47.4. On Thursday, April's seasonally adjusted current account balance exceeded expectations of 3,48.6 billion yen with a balance of 3,398.8 billion yen. Earlier in the same week, Labor cash receipts for March rose 0.6% compared to a growth rate of 1.4% in the previous period, while foreign reserves fell slightly to $1,279 billion from $1,290.6 billion.
On another level, according to the platforms of stock trading companies, Japan's Nikkei 225 stock index fell 0.2% to about 38,150 while the broader index lost 0.4% to 2,718 on Monday, reversing the previous session's gains as investors eye Japan's first-quarter gross domestic product report this week. Markets have also become cautious ahead of April inflation data in the US this week, which could provide clues about the next step the Federal Reserve may take.
According to trading, Notable losses were seen from heavyweight stocks on the index such as Toyota Motor (-1.3%), Nippon Tel (-1%), Tokyo Electric Power (-3%), Daikin Industries (-0.4%), and Nippon Yusen (-0.9%). Meanwhile, technology, financials, and consumer-related stocks generally advanced, with gains in shares of Disco Corp (2.1%), Mitsubishi UFJ (1.2%), and Shiseido (4.7%). Elsewhere, SoftBank Group's stock jumped 2.2% ahead of its quarterly earnings report.
USD/JPY Technical Analysis and Expectations Today:
USD/JPY continues to trade at a few levels above the 100-hour moving average line. However, the currency pair appears to be closer to a bullish breakout. Also, the RSI on the 14-hour frame is approaching overbought levels.
In the near term, and according to the performance on the hourly chart, it appears that the USD/JPY currency pair is trading within a sideways channel. However, the RSI on the 14-hour chart appears to be attempting a bullish breakout in overbought conditions. Therefore, the bulls will target potential breakout profits at around 156.93 or higher at the 157.94 resistance. On the other hand, the bears will look to pounce on pullbacks at around 154.79 or lower at the 153.78 support.
In the long term, and according to the performance on the daily chart, it appears that the USD/JPY currency pair is trading within an upward channel. However, the 14-day RSI has recently pulled back to recover from overbought conditions. Therefore, the bears will target extended pullback profits at around 151.98 or lower at the 147.62 support. On the other hand, the bulls will target long-term profits at around 160.06 or higher at the 163.78 resistance.
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