Technical Analysis

USD/JPY Price Analysis – March 31, 2023

By LonghornFX Technical Analysis
Mar 31, 20233 min

Daily Price Outlook

The USD/JPY is trading at 133.16, up by 0.36% in 24 hours. The release of Japan's economic figures related to the labor market, retail demand, and Tokyo CPI has resulted in a substantial upward movement for the currency pair.

Moreover, as concerns about additional bank collapse fade, the Japanese Yen, one of the global safe-haven assets, is moving downward versus the US dollar.

US GDP Plunges, Pushing USD/JPY Lower

The final estimate of the US GDP for the fourth quarter of 2022 decreased marginally from 2.7% to 2.6%, down from the Q3 print of 3.2%. Also, according to US data issued on Thursday, the unemployment claims from the previous week rose to 198K, more than expected, pointing to a softening labor market. The data supports the argument for a softer Fed attitude.

Meanwhile, as markets continued to minimize the chance of additional rate rises, the US Dollar Basket (DXY), a gauge of USD performance, fell to 102.17 after the GDP report release.

On Friday, the core PCE price index, which the Fed prefers to use as a gauge of inflation, will be issued. The index will provide more details on the state of the leading economy in the world. Furthermore, it may offer more support for the USD/JPY pair.

Tokyo Inflation Slowdown, Weakening JPY

Inflation in Tokyo continued to drop in March after a strong decline in February, caused by government subsidies for electricity costs.

According to statistics from the Statistical Bureau, Tokyo's Core CPI has increased by 3.2% in the 12 months ending in March, above forecasts for growth of 3.1% but falling short of the previous month's figure of 3.3%. Tokyo's CPI rose 3.3% overall in March, slightly down from the 3.4% increase recorded in February.

Steady inflation indicates that the Bank of Japan's (BoJ) aim to keep inflation consistently at desired targets remains unaffected. It might ensure the likelihood of ending the ultra-loose monetary policy.

Nonetheless, retail demand in Japan remained strong in February. Yearly Retail Sales data has increased significantly from an estimated 5.8% to 6.6%. The BoJ's policymakers and the Japanese government are concerned that factors outside of domestic demand are primarily responsible for inflationary pressures in Japan. However, retail demand right now might ease some concerns.

Moreover, the dismal labor market statistics are the driving force behind the Japanese Yen's recent decline. Compared to the consensus and the previous announcement of 2.4%, the unemployment rate has jumped to 2.6%.

Safe haven USD/JPY rises as Japan's rising unemployment rate demands the continuation of the BoJ's loose policy.

 USD/JPY Price Chart - Source: Tradingview

USD/JPY Intraday Technical Levels

Support      Resistance

132.52         133.57

131.84         133.94

131.46         134.62

Pivot Point: 132.89

USD/JPY  – Technical Outlook

The USD/JPY pair has been exhibiting tight sideways fluctuations since yesterday, hovering around the 133.30 level and maintaining its position below it for now. This sustains the likelihood of resuming the primary bearish trend, with initial targets at 131.60 followed by 130.40.

The price requires a negative impetus to help it achieve the anticipated decline. Notably, breaking below 132.00 would facilitate reaching the desired targets, while surpassing 133.30 would introduce a positive factor, pushing the price towards an intraday and short-term increase.

Today's expected trading range is between 131.90 support and 133.50 resistance.


    * GOLD Price Analysis – March 31, 2023

    * EUR/USD Price Analysis – March 31, 2023

    * USD/JPY Price Analysis – March 10, 2023



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