USD/JPY Struggles for Direction as 2023 Trading Year Closes
As 2023’s trading activities wind down, the USD/JPY pair grapples with a lack of clear momentum, re-entering the 141.00 territory. Amidst post-holiday market lulls leading up to the New Year’s long weekend, the US Dollar (USD) has seen a 0.3% dip against the Japanese Yen (JPY) on the final Friday of the year, culminating in a 1% decline over the week.
The US economy has delivered underwhelming data, highlighted by the disappointing US Chicago Purchasing Managers’ Index (PMI) figures for December. The PMI registered a contractionary 46.9, a stark contrast to November’s 18-month high of 55.8 and significantly below the median forecast of 51.0.
This downturn in US economic indicators is paradoxically fuelling a broader market appetite for risk, with investors anticipating that global economic slowdowns could prompt the Federal Reserve (Fed) to hasten the pace of rate reductions in 2024.
From a technical perspective, the USD/JPY pair recently edged closer to the 140.00 mark, influenced by a positive stochastic momentum that now seems to be waning as it enters overbought territory. This dynamic aligns with the potential resumption of a bearish trend, with the immediate target for the pair placed around 139.45.
The Exponential Moving Average (EMA50) exerts a downward pressure, reinforcing the potential for a continued bearish movement. However, this trend is contingent upon the pair not breaching and sustaining above the 142.35 threshold.
Today’s trading is expected to fluctuate within the support level of 140.50 and the resistance level of 142.00. The predominant trend for the day leans towards bearish, reflecting the broader market dynamics and technical indicators.
USD/JPY Live Chart
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