Usd/jpy declines as New York Empire State Manufacturing Index drops

USDJPY Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.2%	-30.5 Pips
Week to-date	-0.02%	-3.2 Pips
October	3.89%	559.199 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

The United States’ New York Empire State Manufacturing Index experienced a significant decline in October, falling to -11.9 points from a previous 11.5 points recorded in September. This drop indicates a contraction in manufacturing activity within the state, suggesting that the sector is experiencing challenges, potentially due to supply chain issues, labor shortages, or decreased demand. This downturn in manufacturing can negatively impact overall economic growth and employment within the region. The source of this information is the New York Fed, highlighting the ongoing concerns about the state of manufacturing in the U.S. as economic recovery continues post-pandemic.

The movements in the USDJPY currency pair are directly affected by the economic indicators and events from the United States. The recent decline in the New York Empire State Manufacturing Index suggests a weakening industrial base, which could lead to a diminished investor confidence in the U.S. dollar. This is reflected in the USDJPY rate, which saw a decrease of 0.2% to 149.30. A weaker dollar prompts investors to seek more stable currency alternatives, impacting trade and investments across international borders. However, upcoming events such as the monthly retail trade data might provide further insights into consumer spending and economic health, potentially influencing USDJPY movements. Any positive surprise in retail data could bolster the USD, potentially reversing some of its recent losses against the Yen.

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What can we expect from USDJPY today?

USDJPY on Tuesday dropped -0.2% to 149.30. 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 148.85 (S1) with break below could see further selling pressure towards 148.39 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 149.76 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 148.84 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: