USDJPY declines by 0.31% despite positive U.S. housing data

USDJPY Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.31%	-44.201 Pips
Week to-date	-0.64%	-92.4 Pips
September	-1.25%	-181 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD GDP annual rate
Thu 02:20 PM USD Federal Reserve Chair Jerome Powell speech

What happened lately

The U.S. House Price Index (HPI) showed a modest improvement in July, rising to 0.1%, up from the -0.1% recorded in June, according to the Federal Housing Finance Agency (FHFA). This uptick suggests a stabilization in housing prices following a previously recorded decline. The improvement in the HPI can be attributed to increasing demand in the housing market, which is a positive indicator for the overall health of the U.S. economy. Investors often view rising house prices favorably as they can signal consumer confidence and economic stability.

Despite the positive data from the U.S. housing market, the USDJPY pair experienced a decline on Tuesday, dropping by -0.31% to settle at 143.07. Several factors could have influenced this movement. One possible explanation is that market participants are anticipating significant upcoming events, such as the U.S. GDP annual rate release and the Federal Reserve Chair Jerome Powell’s speech scheduled for Thursday. Both events are expected to provide critical insights into the economic outlook and monetary policy direction. Investors might be positioning themselves cautiously ahead of these high-impact announcements, which could explain the current movement in the USDJPY.

Looking ahead, the impending release of the U.S. GDP annual rate and Jerome Powell’s speech will likely have substantial impacts on the USDJPY currency pair. The GDP data will offer a glimpse into the strength of the U.S. economy, and a strong report could boost the USD, potentially leading to an appreciation in the USDJPY pair. Meanwhile, the Federal Reserve Chair’s speech is highly anticipated; any indications of future monetary policy, particularly regarding interest rates, will be closely analyzed by traders. If Powell suggests a more hawkish stance, indicating possible interest rate hikes, the USD may strengthen, thereby pushing the USDJPY higher. Conversely, a dovish tone could weaken the USD, leading to further declines in the USDJPY pair. Overall, these crucial announcements are likely to drive volatility in the currency markets, making this a pivotal period for the USDJPY.

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What can we expect from USDJPY today?

USDJPY on Tuesday dropped -0.31% to 143.07. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for USDJPY looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at 142.41 (S1) with break below could see further selling pressure towards 141.75 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 144.68 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 142.88 would indicate selling pressure.

For the week to-date, take note that USDJPY is mixed as compared to prior week.

Key levels to watch out: