The USD/JPY currency pair experienced a notable decline, dropping below the 152.00 mark, following the release of Japan's preliminary GDP report for the fourth quarter. The report revealed that Japan's economy grew by 0.7% quarter-on-quarter and 2.8% year-on-year during this period. These figures surpassed market expectations and reinforced predictions for an impending interest rate hike by the Bank of Japan (BoJ). This anticipated policy shift provided significant support to the Japanese Yen (JPY), contributing to the weakening of the USD/JPY pair.
The GDP data's robust performance suggests that Japan's economy is on a solid growth trajectory, bolstering confidence in the JPY. As a result, investors are increasingly betting on the BoJ's readiness to implement further interest rate hikes, which is expected to lend additional strength to the Yen. In contrast, the US Dollar has been languishing near a two-month low, further compounding the downward pressure on the USD/JPY pair.
Market analysts predict that the USD/JPY pair may continue its descent towards the psychological level of 150.00, targeting the 149.60-149.55 zone. Immediate support is anticipated around the 151.45-151.40 area, followed closely by the 150.95-150.90 region. Conversely, should the pair find renewed buying interest, it might attempt to lift beyond the 154.00 round figure, potentially reaching the 154.45-154.50 supply zone.
The technical landscape reveals significant levels that traders are closely monitoring. The 200-day Simple Moving Average (SMA) is positioned near the 152.70 area, acting as a crucial reference point for market participants. Additionally, the round figure of 149.00 emerges as a viable target for the USD/JPY pair, with further downside momentum potentially leading towards the 148.65 region.
A combination of factors is influencing the USD/JPY pair's movement. The optimism surrounding a delay in US President Donald Trump's reciprocal tariffs has contributed to the JPY's appeal as a safe-haven asset. Furthermore, the narrowing rate differential between the United States and Japan adds strength to the lower-yielding Yen.
Despite these dynamics, there remains a possibility for the USD/JPY pair to rise beyond current resistance levels. Should market conditions favor such a scenario, targets in the 154.75-154.80 region are plausible. Nevertheless, sustained weakness in the US Dollar—alongside prospects of a meeting between Russia and the United States—continues to weigh heavily on the pair amid a holiday-thinned market in the US.