USD/JPY Rebounds 1.4%, Testing 155.44 Resistance

USD/JPY Rebounds 1.4%, Testing 155.44 Resistance

Key Point:

  • USD/JPY recovered from 153.60 to 155.00, reaching a 200-hour EMA resistance at 155.44.
  • Bullish trend supported by 50-day EMA at 153.36 and 200-day EMA at 148.48.
  • GDP declined by -0.5% QoQ, worse than expected, highlighting economic challenges.

The USD/JPY pair exhibited a significant recovery on Thursday, beginning from an initial price of 153.60 on Wednesday and climbing to 155.00. This recovery highlights a notable rebound in market sentiment. Technically, this movement saw the pair reaching a resistance level at 155.44, marked by the 200-hour EMA. The last swing high was observed at 156.50, indicating a potential target for bullish traders.

Conversely, the near-term low of 152.00 is a crucial support level, anchoring the pair amidst fluctuations. The overall bullish trend remains reinforced by the 50-day EMA positioned at 153.36 and the 200-day EMA at 148.48, underscoring the sustained upward momentum throughout 2024 with a 10% increase.

Japan’s GDP Drops 0.5% QoQ, Deepening Economic Woes.

Japan’s economic landscape has presented mixed signals, particularly with the latest GDP figures. The quarter-on-quarter decline stands at -0.5%, slightly worse than the expected -0.4%. This downturn is compounded by previous revisions, where the QoQ figure was adjusted from 0.1% to 0.0%, and the annual decline was revised from 0.4% to 0.0%. The annual decline is notably severe at -2.0%, against an expectation of -1.5%.

These metrics paint a challenging economic picture for Japan, likely influencing the yen‘s weakness and the USD/JPY pair’s performance. The discrepancies between expected and actual GDP figures highlight underlying economic vulnerabilities, impacting investor confidence and market dynamics.

Fed Rate Cut Chances at 70% by September 2024

The Federal Reserve’s policy outlook is crucial in shaping market expectations in the United States. There are growing hopes for rate cuts towards late 2024, influenced by easing inflation pressures and a tight labour market. However, the inflation outlook remains cautious, with inflation still above the 2% target despite slowed disinflation. These dynamics add a layer of uncertainty, tempering the market’s optimism. Traders currently see a 70% chance of a rate cut by September, anticipating a reduction of at least 0.25%. As investors gauge the Fed’s policy trajectory, these expectations affect the USD/JPY pair.

USD/JPY Supported by 50-Day EMA at 153.36

The technical landscape for USD/JPY remains strongly bullish. The pair continues to trade well above critical moving averages, specifically the 50-day EMA at 153.36 and the 200-day EMA at 148.48. This positioning suggests that the bullish trend is well-supported, with potential for further gains. These technical indicators buoy market sentiment, providing a robust foundation for upward movement. The resilience above these EMAs indicates strong buying interest, with the pair firmly entrenched in bullish territory.