- A bearish start to the trading week for the USD/JPY pair with losses to the support level of 151.47 before settling around the 151.85 level at the time of writing.
- Furthermore, the Japanese yen’s gains increased as investors responded to strong economic growth data.
- According to economic indicators, Japan's economy grew by 0.7% on a quarterly basis in the fourth quarter, accelerating from a growth of 0.4% in the previous quarter and exceeding expectations of 0.3%.
- On an annual basis, Japan's GDP grew by 2.8% in the fourth quarter, in line with expectations and up from growth of 1.7% in the third quarter.
Overall, the positive numbers reinforced the hawkish expectations for the Bank of Japan's monetary policy. While uncertainty remains about whether the Bank of Japan will raise interest rates again in March, a rate hike later in the year is widely expected. The Japanese Yen has also gained strength from the recent weakness of the US dollar, driven by weak US economic data and easing fears of a global trade war.
Trading Tips:
We still recommend buying the US Dollar against the Japanese Yen but without risking the trading account from any sudden price reversals by activating take-profit and stop-loss orders.
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Tariffs and US Stock Performance
Since President Donald Trump took office, Wall Street stock markets have been guessing "whether or not he will do it" regarding tariffs, since he promised to impose comprehensive duties on both geopolitical allies and competitors alike. While the initial reaction in the stock market was cautious, the mood is changing as the administration's policies become increasingly confused with delays and exemptions mixed with aggressive rhetoric.
For stock investors, they have ignored the concerns and bought stocks. While the risk of a global trade war remains dangerously real after Trump announced a 25% tariff on steel and aluminium imports that will take effect in March and reciprocal tariffs on many trading partners expected to be imposed in April, US stock indices continue to rise, with the S&P 500 ending last week just points away from its all-time high. The question now is whether the buyers driving these gains are adequately assessing what Trump will do - or are recklessly throwing caution to the wind.
USD/JPY Technical Analysis and Expectations Today:
According to the daily chart, the bears are trying to move the USD/JPY currency pair with stronger downward levels, and now the psychological support level of 150.00 is the most important for further control, and at the same time, technical indicators will move towards strong oversold levels, led by the direction of the Relative Strength Index and the Stochastic Oscillator. I still recommend buying the USD/JPY from any downward level. Conversely, on the same timeframe, the bulls will successfully break the downward trend if the pair rebounds above the resistance of 155.50 again. The reaction to the content of the minutes of the latest meeting of the US Federal Reserve and any new developments regarding US trade wars, as well as signals from central bank officials, will affect the performance of the dollar against the Japanese Yen.
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