USDJPY on Friday dropped -1.24% to 144.37. Week ending 2024-08-23 moved lower by -2.43%. What you need to know.

USDJPY Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-1.24%	-180.7 Pips
Week 242024-08-23	-2.43%	-358.899 Pips
August	-3.59%	-537.7 Pips

Upcoming key events for the new week (London Time)

Thu 01:30 PM Initial Unemployment Insurance Claims
Thu 01:30 PM GDP annual rate
Fri 12:30 AM Tokyo CPI (Inflation Rate) (12-mth)
Fri 01:30 PM PCE Price Index (excluding food and energy) (1-mth)
Fri 01:30 PM PCE Price Index (excluding food and energy) (12-mth)

What happened over the week

In the United States, Federal Reserve Chair Jerome Powell hinted at potential interest rate cuts in September amidst a cooling labor market and prevailing economic uncertainties during his speech at the Jackson Hole Symposium. Supporting this outlook, initial unemployment insurance claims for the week ending 17 August rose to 232,000 from a revised figure of 227,000 from the previous week, according to the Department of Labor. The rising unemployment claims suggest a softening job market, which can contribute to the Fed’s consideration of rate cuts to stimulate the economy.

In Japan, according to the Statistics Bureau of Japan, the national CPI inflation rate remained stable at 2.8% in July, the same as in June. However, the CPI inflation rate excluding food and energy decreased to 1.9% from 2.2% in June, implicating reduced price pressures in core goods and services. The CPI inflation rate excluding fresh food increased marginally to 2.7% in July from 2.6% previously. Additionally, Japan’s merchandise trade balance experienced a substantial deficit in July, dropping to -621.8 billion yen from a surplus of 224 billion yen in June, as reported by the Ministry of Finance Japan. Trade data also showed significant growth in exports (up 10.3% year-over-year in July compared to 5.4% in June) and imports (up 16.6% year-over-year in July from 3.2% in June), reflecting robust economic activity but also larger trade imbalances.

The USDJPY pair dropped -1.24% on Friday to 144.37000, with a weekly decline of -2.43%. The announcements from Federal Reserve Chair Jerome Powell regarding possible rate cuts have led to the depreciation of the U.S. dollar, as lower interest rates reduce currency appeal for investors seeking higher yields. Concurrently, steady inflation data from Japan along with substantial trade deficits point to a relatively stable yet challenged economic environment. As upcoming events include critical economic data releases such as U.S. GDP and PCE Price Index, along with Japan’s Tokyo CPI, the USDJPY pair may continue to exhibit volatility. Fed’s dovish stance coupled with Japan’s persistent inflation and trade dynamics may further weigh down the USD relative to JPY in the near term.

From social media

Japan Sees 2.7% Spike in Consumer Prices as Energy and Food Costs Surge: The Ministry of Internal Affairs and Communications announced that Japan’s nationwide Consumer Price Index (CPI) for July, excluding fresh food due to its price volatility,… https://t.co/NHrZSZ8khC

— News On Japan (@newsonjapan) August 23, 2024

What can we expect from USDJPY for the new week and what happened on Friday?

USDJPY on Friday dropped -1.24% to 144.37. Price is below 9-Day EMA while Stochastic is rising in oversold zone. For the week ending ,2024-08-23, the pair dropped -2.43% or -358.899 pips lower.

Looking ahead, USDJPY looks bearish as the pair posted lower in Friday trading session.

For the new week, our technical outlook looks bearish, immediate support level is at 143.17 (WS1) with break below could see further selling pressure towards 141.97 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 147.32 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 144.04 would indicate selling pressure.

For the month of August, USDJPY is down by -3.59% or -537.7 pips lower.

Weekly key levels to watch out:

You might also be interested in:

Powell, Review and Outlook Source: Federal Reserve
Quarterly Services Survey Source: Census Bureau
Minutes of the Federal Open Market Committee, July 30–31, 2024 Source: Federal Reserve
Trade Statistics (July 2024 [Provisional]) Source: Ministry of Finance