USDJPY on Friday dropped -2% to 142.15. Week ending 2024-09-27 moved lower by -1.29%. What happened.

USDJPY Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-2%	-290.1 Pips
Week 242024-09-27	-1.29%	-185.4 Pips
September	-1.89%	-274 Pips

Upcoming key events for the new week (London Time)

Mon 06:00 PM Federal Reserve Chair Jerome Powell speech
Thu 01:30 PM Initial Unemployment Insurance Claims
Fri 01:30 PM Nonfarm Payroll Employment

What happened over the week

In the United States, the Index of Consumer Sentiment rose to 70.1 points in September from 69 points in August, indicating an improvement in consumer confidence according to the University of Michigan. However, the Bureau of Economic Analysis reported a slowdown in consumer spending for August, with a drop to 0.2% from 0.5% in July. The Personal Consumption Expenditures (PCE) Price Index for August also saw a slight decline to 0.1%, down from 0.2% in July. Excluding food and energy, the PCE Price Index rose to 2.7% over the past 12 months, an increase from 2.6% in July. The U.S. GDP for Q2 2024 increased at an annual rate of 3.0%, showing robust economic growth, while new orders for durable goods in August remained flat compared to a revised 9.9% increase in July. The initial unemployment insurance claims dropped to 218,000 in the week ending September 21, revealing a marginal improvement in the labor market. Finally, the House Price Index in July also showed a slight improvement, rising to 0.1% from -0.1% in June, as reported by the FHFA.

In Japan, the Statistics Bureau of Japan reported that Tokyo’s Consumer Price Index (CPI), excluding fresh food and energy, remained unchanged at 1.6% in September as compared to August. However, Tokyo’s CPI excluding fresh food dropped to 2% in September from 2.4% in August, while the overall Tokyo CPI inflation rate decreased to 2.2% in September from 2.6% in August. These figures reflect a weakening inflationary pressure in Japan, which might signal a slowdown in economic activity or weaker consumer demand.

The observed drop in the USDJPY exchange rate by -2% to 142.15000 and a weekly decline of -1.29% can be attributed to a combination of these economic data releases. On one hand, the U.S. displayed mixed signals with strong GDP growth but cooling consumer spending and durable goods orders, alongside the initial unemployment claims showing minimal improvement. On the other hand, Japan’s inflation data indicated easing price pressures, potentially diminishing the need for aggressive monetary policy tightening by the Bank of Japan. The Federal Reserve Chair Jerome Powell’s upcoming speech and key data releases such as Nonfarm Payroll Employment might further influence market expectations. Market participants likely perceive the current U.S. economic data as insufficiently strong to exert upward pressure on the dollar against the yen, hence the move lower in USDJPY.

From social media

Minutes of the Monetary Policy Meeting on July 30 and 31, 2024 https://t.co/HjN5tRiU2B

— Bank of Japan (@Bank_of_Japan_e) September 25, 2024

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

USDJPY on Friday dropped -2% to 142.15. Price is below 9-Day EMA while Stochastic is falling. For the week ending ,2024-09-27, the pair dropped -1.29% or -185.4 pips lower.

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

For the new week, our technical outlook is mixed. To see upside interest, we prefer to look at price breakout of week high of 146.49 or at least consolidates above Weekly Pivot level of 143.57. On the downside, we are looking at week low 142.06 or 140.64 (WS1) as immediate support level. USDJPY need to break on either side to indicate a short-term bias. A close below week low of 142.06 would indicate selling pressure.

For the month of September, USDJPY is down by -1.89% or -274 pips lower.

Weekly key levels to watch out:

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