Between Thursday and the early part of the European session on Friday, the USD/JPY currency pair showed tremendous strength. It pushed its way back up into the mid-153.00s. This movement went a long way toward making up for the big decline from yesterday, though. During that time, the pair hit more than one-week lows. The recent drops in the exchange rate arrive alongside mixed economic signals from Japan, especially with regard to consumer activity.
Japan’s internal affairs ministry said household spending rose 1.8% from a year earlier in September. This disappointing figure came as bad news to market expectations, which were already set to expect growth of 2.5%. It did beat out last month’s 2.3% growth. Household consumption dipped -0.7% m-o-m, sa. This decline is a good sign for consumer confidence and economic activity.
Market analysts are most focused on the USD/JPY pair—specifically in the 153.10-153.00 zone as an area of serious interest. This level is very important to protect the short term downside. It’s even more remarkable as we make our way to the overnight swing low around the 152.80 area. A daily close below the 153.10-153.00 area would likely clear a path for more aggressive downside in the currency pair.
He emphasized that these moves are not supported by the country’s true economic fundamentals. Mimura’s statement arrives at a make-or-break time. Recent softer domestic data has doused market hopes for an imminent rate hike from the Bank of Japan (BoJ).
Even though it is a very heavy lift, speculation is rampant. The USD/JPY currency pair could further rise in the coming days towards the obvious strong resistance of 155.00 level. Should the momentum persist, buyers will probably aim for upper resistances ranging 155.60 to 155.65. They might even set their sights on the 156.00 line. Investors are understandably gunshy after multiple failed bids to gain a foothold in the mid-154.00s. These efforts have been uneven and marked by cycles of making progress and soon after losing those hard-won improvements.
The currency pair runs into additional resistance at the 154.00 level. In the immediate term, traders are eyeing a supply zone around the 154.45-50 region, viewed as key obstacles to the resumption of upward momentum. Japan is now sending totally contradictory economic signals. Consequently, market participants are remaining on the lookout for changes in monetary policy and fiscal policy that might change the value of currencies.