- USD/JPY recovers from a one-week low reached in reaction to Tuesday’s lower US CPI.
- The dismal Japanese GDP, along with risk appetite, weakens the Yen and lends support to it.
- Bets that the Fed is done raising rates weigh on the US and keep a lid on any further hikes.
USD/JPY attracts some downside buying near the 150.20 area on Wednesday and recovers some of the previous day’s losses, triggered by a weaker US CPI, to a one-week low. Prices maintained the modest intraday gains during the early stages of the European session and are currently trading around the 150.45 zone, up almost 0.15% on the day, although without continuity.
Data released Wednesday showed the Japanese economy contracted for the first time in three quarters, which should allow the Bank of Japan to delay abandoning a decade-long accommodative monetary policy. Apart from this, the prevailing risk environment acts as a tailwind for the USD/JPY pair.
On the other hand, the Dollar remains close to its lowest level since September 1, affected by the decline in inflation in the US, which reaffirmed expectations that the Federal Reserve (Fed) has ended its campaign of tightening monetary policy. This, in turn, stops bulls from placing new bets on the USD/JPY pair, justifying caution before positioning for fresh gains.
From a technical point of view, prices showed resistance below the 100 SMA on the 4-hour chart and managed to hold above the psychological mark of 150.00. The latter coincides with the 200 SMA on the 4-hour chart and is followed by an ascending trend line extending from the October low, around the 149.70 area, which should act as a support point for the USD/JPY.
A convincing break below the aforementioned support levels will be considered as a new trigger for the bears and will pave the way to the downside. The USD/JPY pair could then accelerate the bearish trajectory towards the intermediate support of 149.20-149.15 en route to the round figure of 149.00.
On the other hand, any move higher will face some resistance near the 151.00 signal, ahead of the 151.20 zone and the yearly high, around the 151.90 zone touched on Monday. The continuation of the uptrend above the 152.00 signal would provide new impetus for the bulls and would lay the foundation for an extension of the uptrend that has been observed since the beginning of the year.
USD/JPY 4-hour chart
USD/JPY Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
