USDJPY Down This Week, But Trend Remains Bullish

Sellers have returned in USDJPY this week, however, the larger trend still remains bullish, with daily moving averages acting as support. Earlier this week, the Japanese average cash earnings showed a decent jump, but there was no price activity, and last night’s household spending didn’t have much impact either. However, they are positive for the JPY in the mid-term.

Moving averages have been doing a great job for this pair, particularly the 50 SMA (yellow) on the daily chart. Buyers continue to buy USD/JPY dips against this moving average, and on Wednesday we saw a bounce off this moving average, similar to the bullish reversal after the Bank of Japan intervention which sent this pair 11 cents lower.

So buyers remain in control on the long run, but the USD/JPY’s first support would be right below 155, with sellers in control this week, where the 50 SMA is. Once reached, the next stop would be at 153.60, the low from the middle of May, while the low following the BOJ intervention is slightly below 152.

USD/JPY Chart Daily – The 50 SMA Still Holds As Support

Household spending turned negative last month, declining by 1.2%, however, today’s report was expected to show a positive reversal and an increase of 0.6%.

Japan Household Spending for April

1. Household Spending Month-on-Month (MoM):
   • April: -1.2%
   • March: +1.2%
2. Household Spending Year-on-Year (YoY):
   • April: +0.5% (vs. +0.6% expected)
   • March: +1.2%

Month-on-Month (MoM) Decline:

• The April data showed a significant decline in household spending by -1.2% MoM, reversing the positive growth of +1.2% observed in March. This drop suggests a potential slowdown in consumer spending for the month.

Year-on-Year (YoY) Increase:

• On a YoY basis, household spending rose by +0.5% in April, slightly below the expected +0.6%. Despite missing expectations, this marks the first YoY rise in 14 months, indicating some recovery in consumer spending compared to the same period last year.

The April household spending data from Japan presents a mixed picture, with a significant MoM decline of 1.2% but a YoY increase of 0.5%, marking the first rise in 14 months. This indicates some recovery in consumer spending, albeit with ongoing volatility. The Japanese authorities are pinning hopes on pay hikes to stimulate spending and support economic recovery. Recent pay talks have resulted in decent salary hikes, which could potentially boost consumer confidence and drive household spending.

USD/JPY Live Chart