Japanese Yen: Fundamentals and Technicals of USD/JPY

Explore the Japanese Yen fundamentals and technicals in the USD/JPY pairing for comprehensive trading insights. Enhance your strategy today.

Discover the latest insights into the USD/JPY market with a comprehensive analysis of the Japanese Yen outlook, combining fundamental and technical perspectives. Get ahead in your trading strategy by exploring key factors influencing the currency pair.

Japanese Yen Fundamental Overview

The recent trading week for the Japanese Yen concluded on a subdued note, influenced by the aftermath of the US Thanksgiving Day. However, Friday brought crucial information for the Bank of Japan (BOJ) analysis. Headline inflation remained above 2%, surpassing estimates and staying above 3%. This consistent performance strengthens the case for a policy shift, as the BOJ aims for sustained +2% inflation. A hawkish move could support the Yen and mark the end of the hostile interest rates policy.

Japanese Yen: Fundamentals and Technicals of USD/JPY

Potential Impact of the Israel-Hamas Situation

The ongoing Israel-Hamas conflict adds an element of uncertainty, with the Japanese Yen possibly gaining additional support in case of escalation due to safe-haven demand. Keep a close watch on developments in this geopolitical situation.

Focus on US Economic Data

In the upcoming week, attention will be toward US economic data, with the core PCE deflator taking the spotlight as the Federal Reserve’s preferred inflation measure. Meanwhile, Japan’s agenda includes vital indicators such as BoJ officials’ scattered insights, retail sales, and unemployment data.

Market Expectations and Influences

Money market pricing indicates a potential rate hike towards the latter part 2024. However, incoming data remains highly influential, with the ability to reshape expectations, as witnessed with several central banks this year.

USD/JPY Technical Analysis

The USD/JPY pair has shown respect for the 50-day moving average, while the Relative Strength Index (RSI) signals short-term bearish momentum. Notably, last week’s weekly candle close formed a hammer-like candlestick, suggesting a possible longer-term bullish preference. Recent daily candles resemble an ascending triangle pattern, reinforcing a bullish outlook.

Key Resistance Levels

• 151.95
• 150.00

Key Support Levels

• 148.16
• 50-day moving average
• 147.37
• 145.91
• 145.00

IG Client Sentiment

According to IG Client Sentiment (IGCS), retail traders currently hold a net SHORT position on USD/JPY, with 81% of traders in short positions as of the latest data.

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