USD/JPy low as the fears of recession and Japan data disappoint

  • The USD/JPY is quoting slightly down, caught in a narrow range, since concerns about the growth press the dollar while the weak Japanese data limit the strength of the YEN.
  • The US GDP contracted 0.3% in Q1, inflation slowed down, and operators now see greater possibilities of features of fees by the Fed; Trump renews criticism of Powell.
  • The technical signals are still bassist, with multiple smokes pointing down and the pair fighting below the resistance in 143.57.

The USD/JPY is quoting with modest losses, around the middle zone of 143.00 after the disappointing US growth data and the little encouraging Japanese economic reports that fed a divergent feeling around both currencies. The US economy contracted 0.3% in the first quarter of 2025, the first fall since 2022, breaking growth expectations and highlighting the impact of the highest imports and the reduction of government spending. At the same time, Japan reported industrial production and retail retail sales than expected, which limited the potential for appreciation of the Yen even when the appetite due to the global risk faltered.

In the Macroeconomic Front, the US Economic Analysis Office reported that the real GDP was reduced by 0.3% in Q1, breaking the market forecast of a 0.4% growth and marking a strong deceleration with respect to the 2.4% increase in Q4 of 2024. The contraction was mainly driven by a 41% increase in imports and lower government disbursements. Meanwhile, the underlying inflation of the PCE, the indicator preferred by the FED, modeled its growth at 2.3% year -on -year, in line with expectations and below 2.5% in February. Other data showed a weaker job creation, with the ADP report revealing only 62,000 new jobs in April compared to the 108,000 expected.

Despite the softest data, personal spending remained solid in March, increasing 0.7%, while income grew 0.5%. However, the feeling of the market became cautious, with the industrial average Dow Jones falling more than 200 points and remaining around 40,300. President Donald Trump revived the tension when blaming the economic recession to his predecessor and criticizing the president of the FED, Jerome Powell, during a speech, stating that he knows more about interest rates. In addition, Trump hinted in advances in trade negotiations with Canada and possibly with China.

In Japan, Yen weakened 0.5% against the dollar, since industrial production data and retail sales disappointed, highlighting internal fragility. Although the Bank of Japan is not expected to adjust its policy at its next meeting, investors will focus on updated forecasts and any signal on trade -related risks. With the commercial negotiations between the US and Japan in progress and the macroeconomic indicators of China also pointing out a slowdown, the markets remain in tension for the key publication of the non -agricultural payroll on Friday.

Technical analysis

From a technical point of view, the USD/JPY is showing bassist signals, currently quoting around 143.00. The pair is contained between 142.93 and 143.05. The RSI in 43.20 is neutral, while the MACD gives a soft purchase indication. However, the momentum at 0.55 and the flat ultimate oscillator in 52.21 show indecision. The mobile socks are inclined downward, with the 20 -day SMA in 143.57, the 100 -day in 150.99 and the 200 -day in 149.81, all suggesting a descending trend. The additional resistance is found in 143.84 and 144.63, while support levels are observed in 142.88, 142.76 and 142.45.

The market approach is now addressed to the ISM manufacturing PMI and the Friday Employment Report, which will be fundamental to shape the expectations about the next movement of the Fed. Until then, the feeling of risk and the expectations of rates will probably issue the short -term address.

Daily graph

Source: Fx Street

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