USDJPY Analysis
| Performance after Tuesday | |||||
| Period | Pct | Chg | Momentum | ||
| Tuesday | 0.35% | 51.2 Pips |  |
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| Week to-date | 3.83% | 547.199 Pips | |
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| October | 3.16% | 454.499 Pips |  |
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Upcoming key events (London Time)
Wed 07:00 PM USD FOMC Meeting Minutes Thu 01:30 PM USD CPI Inflation Rate (12-mth)
What happened lately
In Japan, the Current Account balance for August showed a significant improvement, reaching 3803.6 billion yen, up from 3193 billion yen in July. This increase suggests a stronger inflow of funds into Japan, which can be attributed to factors such as improved trade balance or increased income from overseas investments. However, there was a decline in Japan’s Total Labor Cash Earnings, which fell to 3% in August compared to 3.6% in July, according to the Ministry of Health, Labor and Welfare (MHLW). This decrease in earnings indicates a slowdown in wage growth, which could have an impact on consumer spending and overall economic growth in Japan.
The USDJPY shows a 0.35% increase, reaching 148.25 on Tuesday. This movement in the currency pair reflects a complex interplay of economic data and investor sentiment. The rise could be influenced by the strengthening US dollar, driven by the anticipation of upcoming economic events in the United States, particularly with high-impact occurrences like the FOMC Meeting Minutes and the CPI Inflation Rate scheduled in the following days. These events are likely to impact investor expectations on US interest rates and inflation, which could further influence the strength of the dollar against the yen.
As Japan’s current data signals a mixed economic outlook, with a stronger current account and weaker wage growth, the US economic calendar’s high-impact events could create additional pressure or volatility on the USDJPY pair. Investors may anticipate tighter US monetary policy if inflation data supports such a move, driving the USD higher. Meanwhile, Japan’s lower wage growth could limit the yen’s strength, as it may signal slower domestic consumption and economic growth. Therefore, with the current account boost possibly offset by declining earnings, and with key US data forthcoming, the USDJPY could experience further appreciation, especially if US data continues to support a robust economic outlook and potential interest rate hikes.
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What can we expect from USDJPY today?
USDJPY on Tuesday rose 0.35% to 148.25. Price is above 9-Day EMA while Stochastic is rising.
Updated daily direction for USDJPY looks bullish as the pair ended higher after Tuesday trading session.
Looking ahead for the day, immediate upside resistance level is R1 at 148.64 with break above could target R2 at 149.03. While towards the downside, we are looking at daily low of 147.34 as an important support. Break below this level could weaken the current bullish momentum. A break above 148.38 would suggest bullish bias after recent positive movement.
For the week to-date, take note that USDJPY is bullish as the pair continued to trade higher and is up by 3.83% over the past few days.
Key levels to watch out:
| R3 | 149.69 |
| R2 | 149.03 |
| R1 | 148.64 |
| Daily Pivot | 147.99 |
| S1 | 147.6 |
| S2 | 146.95 |
| S3 | 146.56 |