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USD/JPY Tumbles Below Key SMA: Eyes on Japan’s GDP & US Economic Data

In a notable shift in forex markets, the USD/JPY pair has seen a sharp decline, drawing intense focus on upcoming key economic releases from Japan and the US.

Key Points:

  1. 📉 USD/JPY Plunge: The pair dropped by 0.95%, struggling to maintain the 20-day SMA, a crucial support since July.
  2. 🌍 Global Data Watch: Markets await Japan’s Q3 GDP and US PPI & Retail Sales data, with potential impacts on currency dynamics.
  3. 📊 Technical Outlook: USD/JPY shows a bearish bias on daily charts with key supports and resistances identified.

USD/JPY H4 Chart

In a significant turn of events in the forex market, the USD/JPY pair has experienced substantial setbacks in Tuesday’s session, descending towards a critical trajectory influenced by recent soft CPI data from the US. This move has shifted the market’s attention to the upcoming high-tier economic data from both Japan and the United States, slated for release on Wednesday.

The US consumer price inflation for October reported lower-than-anticipated figures, evidenced by the flat headline Consumer Price Index (CPI) and a mere 0.2% monthly increase in core prices. Year-on-Year, the measure decelerated to 4%. This data has led to market speculation on a less hawkish Federal Reserve stance, with possible earlier rate cuts, triggering risk-on flows and weakening the USD.

Conversely, the focus is also on Japan’s preliminary Gross Domestic Product (GDP) figures. Expectations of a 0.6% annualized contraction, down from the previous 4.8%, could significantly influence the Japanese Yen. Former Bank of Japan official Hideo Hayakawa’s projection of a rate hike by April 2024 adds to this anticipation. Strong economic figures could bolster the JPY.

On the technical front, the USD/JPY pair exhibits a neutral to bearish inclination. The Relative Strength Index (RSI) is tilting southward, indicating bearish momentum, while the Moving Average Convergence Divergence (MACD) histogram shows flat green bars. Despite recent bearish tendencies, the pair remains above the 100 and 200-day SMAs, hinting at longer-term bullish control.

Key support levels are identified at 150.30 (20-day SMA), followed by 150.00 and 149.00. Resistance levels to watch are 151.00, 151.50, and 153.00.

As the market braces for the Japanese Q3 GDP figures and the US Producer Price Index (PPI) and Retail Sales data, investors and traders alike are closely monitoring these developments. The outcomes of these reports are poised to play a pivotal role in shaping the future trajectory of the USD/JPY currency pair.