The USD/JPY pair opened today at 160.774 and has dropped to 160.672, currently down by 0.06%, as market focus shifts to potential BOJ policy changes and higher Japanese economic indicators.
Key Points
- Strong Japanese industrial output and labor data boost sentiment towards the yen.
- Investors are anticipating the USD Core PCE Price Index m/m economic data today.
- The yen may weaken further unless US economic data prompts a sharper Fed rate cut response.
USD/JPY Daily Price Analysis – 28/06/2024
The USD/JPY pair closed the day at 160.774, after opening at 160.825; this represented a decrease of just -0.03%. A buoyant set of Japanese economic figures led to a small dip. Solid Japan industrial output and labor data light the way for a third-quarter GDP bounce. Such numbers chime with the message the Bank of Japan (BoJ) has been trying to hammer home, that Q1’s GDP fall was temporary. On top of this, the fact that private consumption and exports are providing sound contributions is also helping to improve sentiment towards JPY, while recent gains in retail sales emphasize such support.
The USD/JPY pair started at 160.774 today and has dropped slightly to reach a low of 160.672, so it is currently down by around -0.06%. The yen is underpinned by higher Japanese economic indicators and market focus on BOJ policy tweaks. The Bank of Japan could even think about moving as early as July if price growth accelerates and wage increases are convincing enough, although the broad market view is that such a move would come in October. However, this easing appears theoretically more supportive of the yen, and that would be good news for Japan’s beleaguered domestic industries.
Key Economic Data and News to Be Released Today
Investors are closely watching the latest US jobless claims figures, which have shown a trend of labor market rebalancing through reduced job availability rather than increased layoffs. Additionally, the release of the USD Core PCE Price Index m/m data today is anticipated to provide further insights into inflation trends and could influence market sentiment significantly. Interest rate futures held steady after this data, continuing to price in two 25 basis-point rate cuts by the end of the calendar year.
Meanwhile, the yen remains heavy and will probably lose more ground in the weeks ahead unless US economic data weakens sharply, spurring a much steeper rate cut response from the Fed.
USD/JPY Technical Analysis – 28/06/2024
USD/JPY, from a technical analysis point of view, is bullish on the long-term. The pair is trading above the intraday 200 EMA, showing that we may expect price to start pushing high when the current pull back is over.
The RSI is trading closer to the oversold price level also seems to agree with our current trading bias. However, should the price break below the low of the day while also closing below the 200 EMA, our short-term bias will switch bearish.
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