USD/JPY Under Pressure as Japanese Yen Gains Amid US Economic Uncertainty

Arslan Butt•Thursday, December 21, 2023•1 min read

The Japanese Yen (JPY) has gained ground against the US Dollar (USD) for the second consecutive day, pulling the USD/JPY pair beneath the critical 143.00 level in the Asian trading session. This rise in the Yen is partly attributed to the recent sharp downturn in US equities, reinforcing its status as a refuge in times of market uncertainty. Additionally, the Yen found support from the Japanese government’s upgraded economic growth projections. However, the Bank of Japan’s commitment to its ultra-dovish policy stance earlier in the week could temper the Yen’s upward trajectory.

Conversely, the US Dollar remains under pressure due to mounting expectations of the Federal Reserve commencing rate cuts by March 2024, influencing the USD/JPY pair’s dynamics. This sentiment is further cemented by the drop in US Treasury yields to new multi-month lows, overshadowing recent positive US economic data. These factors collectively provide little boost to the Dollar, suggesting potential further declines.

USD/JPY Technical Outlook

The USDJPY pair experienced a notable decline yesterday, now testing the 142.76 support level, influenced by negative pressure from the EMA50. This raises the likelihood of breaching this level, paving the way for further declines towards the 140.65 region.

The bearish trend is expected to persist, contingent upon the pair breaking below 142.76. Failure to do so may halt the decline and trigger a recovery.
Today’s trading range is anticipated to lie between 142.00 support and 143.50 resistance, with the day’s trend expected to be bearish.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.