Traders will focus on Fed Chair Jerome Powell’s speech today for clues on future U.S. rate hikes, with hawkish or dovish comments likely to influence USD/JPY’s direction.
Key Points
- USD/JPY fell 1.79% on Friday, closing at 142.215.
- Japan’s economic concerns and major corporate losses drove the decline.
- USD/JPY rebounded 0.35% today but remains bearish.
USD/JPY Daily Price Analysis – 30/09/2024
On Friday, USD/JPY saw a sharp decline, closing at 142.215 after opening at 144.822, marking a significant 1.79% drop. Today, the pair has shown a mild recovery, with current prices at 142.707, up 0.35% from the opening price of 142.293.
Friday’s steep decline can largely be attributed to economic concerns in Japan following a sharp 4.8% drop in the Nikkei Stock Average. Investors are anxious about the economic policies of incoming Prime Minister Shigeru Ishiba, who may implement higher taxes. Additionally, significant losses in major Japanese conglomerates like Toyota, Honda, and SoftBank fueled a risk-off sentiment that pushed the yen higher, driving USD/JPY lower.
Meanwhile, U.S. inflation data released on Friday signaled cooling price pressures, which weakened the U.S. dollar further. The easing inflation reduces expectations of aggressive Fed rate hikes, adding downward pressure on the pair.
USD/JPY opened today at 142.293 and has rebounded slightly to 142.707, a 0.35% gain. This upward move appears to be a corrective action after Friday’s sell-off. However, broader trends point to a continued bearish bias for the pair.
Meanwhile, Japan’s industrial production fell by 3.3% in August, reflecting weaker economic conditions, while retail sales slightly offset the negative data, growing by 2.8%. These mixed signals could keep the yen relatively stable for now.
Key Economic Data and News to Be Released Today
Fed Chair Jerome Powell’s speech later today will be a critical event for USD/JPY. Traders will be looking for hints on the Fed’s future policy direction, particularly in light of recent inflation data that suggest price pressures are easing.
Should Powell signal a pause or slower pace of rate hikes, this could weigh further on the dollar, potentially pushing USD/JPY lower. However, any hawkish comments could spur a short-term dollar recovery, leading to an upside for the pair.
Additionally, developments in Japan’s political landscape will continue to play a significant role in determining the yen’s trajectory. If market sentiment surrounding Prime Minister Shigeru Ishiba worsens, further weakening of the yen could limit USD/JPY’s downside potential.
USD/JPY Technical Analysis – 30/09/2024
Following the heavy bearish movement on Friday, the market has retraced significantly earlier this morning. While this move may have looked like a bullish reversal, it really isn’t. In fact, what we are looking at in the chart below is more likely to be a retracement before a further push to the downside.
Price is currently trending below the intraday 200 EMA, signifying a bearish outlook in the short-term. The RSI is also signifying that the price is almost overbought. This shows that the buyers are getting overpowered by the sellers.
However, a proper short entry will be at the bounce off the 200 EMA or the pivot point. But should price break above these points of interest, we may have to start anticipating a full-blown bullish reversal.
USD/JPY Fibonacci Key Price Levels 30/09/2024
Short-term traders planning to invest in USD/JPY today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 141..902 | 145.283 |
| 140.857 | 146.328 |
| 139.166 | 148.018 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
