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USD/JPY Analysis Today 01/04: Japanese Intervention (Chart)

By Published On: April 11, 20243.7 min readViews: 1000 Comments on USD/JPY Analysis Today 01/04: Japanese Intervention (Chart)

For a downward correction in the trend to occur, Japan must intervene in the markets to prevent further collapse of the currency price, in addition to the weakness of the US job numbers by the end of the week. 
  • The strong upward trend of the USD/JPY currency pair remains supported by global central bank policies, with the pair stabilizing around the 151.43 resistance level at the time of writing the analysis.
  • Amidst this performance, investors and markets are awaiting a possible Japanese intervention in the markets to prevent further collapse of the currency.
  • The US dollar remains the strongest against other major currencies, supported by the so far hawkish policy of the US Federal Reserve and the strong performance of the US economy.

Good job gains continued in the United States in March, while wage growth moderated, suggesting that the country’s Labor market is poised to continue stimulating the economy with limited risk of a return of inflation. Accordingly, salaries in the world’s largest economy are expected to rise by at least 200,000 for the fourth month in a row, according to a Bloomberg survey of economists. The average hourly wage is expected to rise 4.1% from the same month last year, the slowest annual advance since mid-2021.

Meanwhile, resilient employment is keeping demand strong and the economy moving forward at a time when inflation is slowing, albeit unevenly. It also allows Federal Reserve policymakers to delay cutting US interest rates as they await further declines in price pressures.

On the other hand, it will affect the performance of the US dollar. Federal Reserve Chairman Jerome Powell will lead a large group of Federal Reserve policymakers on Wednesday who are scheduled to speak this week. Others who will appear include John Williams, Adriana Kugler, Mary Daly, Austin Golby, Laurie Logan, and Thomas Barkin.

Overall, the increase in the Labor supply helps to reduce wage pressures that would otherwise risk spilling over into sustained inflation. Also, the US jobs report on Friday is expected to show the country’s unemployment rate falling to 3.8%, slightly below the two-year high it hit in February, suggesting the Labor market is losing little momentum. Job openings data for February will provide a glimpse of Labor demand on Tuesday. While economists expect a decline, job openings are still above pre-pandemic levels.

Other economic reports this week include a pair of purchasing managers’ surveys from manufacturers and service providers. Chinese PMI figures, due out on Sunday, will dominate the start of the week’s trading as policymakers, investors and analysts try to gauge the current strength of the world’s second-largest economy. Factory activity is expected to return to growth for the first time since September, while services sector growth is expected to largely maintain its February pace.

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Furthermore, the Caixin manufacturing gauge shows a smaller expansion in activity the next day, focusing more on the private sector. PMI readings from economies across the Asia-Pacific region on the same day will give an idea of regional growth prospects. Also, the Bank of Japan’s quarterly Tankan survey is likely to reflect continued divergence in sentiment across industries. The large manufacturers’ gauge is expected to fall for the first time in a year, while the reading for large non-manufacturers could rise to its highest level in 32 years. Small businesses are likely to be pessimistic, an outcome that could jeopardize small- and medium-sized business wage gains needed to drive the virtuous cycle the Bank of Japan is seeking.

According to the performance on the daily chart attached, there is no change in my technical view of the performance of the price of the USD/JPY. The pair is still rising, and its recent gains were sufficient to push the technical indicators towards strong levels of saturation with purchase.

For a downward correction in the trend to occur, Japan must intervene in the markets to prevent further collapse of the currency price, in addition to the weakness of the US job numbers by the end of the week. Technically, the first break of the trend requires moving towards the support levels of 150.00 and then 148.80, respectively. On the other hand, the closest target for bulls currently is the resistance level of 152.00.

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