Daily Price Outlook

The USD/JPY currency pair is trading at 136.50, up 0.26% in the last 24 hours. The Bank of Japan's dovish stance and concerns over rising US interest rates have declined the Japanese yen.

US Initial Jobless Claims Increase, Driving Down Dollar Value

The US Initial Jobless Claims for the week ended on March 4th showed a significant increase to 211K, the highest since January, compared to the expected 195K and the previous 190K. The markets remain apprehensive due to mixed US data and growing concerns about inflation.

The higher-than-expected unemployment claims have caused a decrease in the dollar's value, with the DXY trading lower at 105.20.

Currently, investors are waiting for positive changes in the nonfarm job market, average hourly wage, and unemployment rate, as these factors are expected to boost the value of the US dollar.

The Bank of Japan's Dovish Stance

Last week, Kazuo Ueda, the upcoming Bank of Japan (BoJ) Governor, declared that he would continue with the accommodative monetary policies implemented by his predecessor, Haruhiko Kuroda. Ueda stated that the Japanese economy has not yet fully recovered and requires sustained support.

Recently released data shows that the Japanese economy avoided a recession in the fourth quarter of 2022. The report indicates that the GDP remained unchanged in Q4 2022, falling short of economists' predictions of 0.2% growth.

According to reports, Kazuo Ueda, the next Governor of the Bank of Japan (BoJ), is expected to maintain the bank's ultra-dovish position in the short term during today's policy meeting. However, experts predict a shift in the bank's stance later this year.

The BoJ decided to keep interest rates at record lows on Friday, stating that it would maintain its current pace of yield curve control (YCC) as it deals with a severe slowdown in the Japanese economy and pursues a leadership change. The central bank retained its short-term and long-term policy interest rates at -0.1% and 0%, respectively.

The bank also stated that it would keep the volatility in 10-year bond rates at 0.5% to negative 0.5% and maintain the pace of quantitative easing at its present level, with no surprises before a change in its top executives.

As a result of the Bank of Japan's dovish outlook, the Japanese yen dropped sharply, losing ground against the US dollar and boosting the momentum of the USD/JPY currency pair.

USD/JPY Intraday Technical Levels

Support      Resistance

135.60         137.03

135.06         137.92

134.17         138.46

Pivot Points:136.49

USD/JPY  – Technical Outlook

The USD/JPY pair tested the bullish channel's support line yesterday, causing downward pressure. However, today the pair is trading above the line, indicating a higher possibility for a bullish trend to resume shortly, with the initial objective being the 137.70 level.

Although stochastic signals are currently positive, the price is supported by the EMA50 from below, further increasing the likelihood of a projected bullish trend.

If the price breaks below 136.30, it could result in downward pressure and end the predicted advance. The trading range for today is expected to be between 135.90 - 137.50.

Daily Price Outlook

The USD/JPY pair is currently trading around 136.00. Investors are closely watching Federal Reserve Chair Jerome Powell's speech for any indications about US monetary policy, causing the pair to remain within a narrow trading range.

Jerome Powell's Upcoming Speech: What to Expect and Its Potential Impact on the Markets

Investor sentiment remains positive towards the US economy despite a tight labor market, rising inflation, and strong service sector activity. However, concerns remain about the vulnerability of the industrial industry.

A recent report indicated a 1.6% decline in factory orders in January, slightly better than the expected decline of 1.8%. Excluding transportation, factory orders rose by 1.2%.

Following the recent report, the US Dollar Index dropped below 104.30, and the softer USD kept the USD/JPY pair in check. Market participants are now waiting for crucial events, including Fed Chair Jerome Powell's speech on Tuesday and the NFP data release on Friday, for more insight into monetary policy.

Jerome Powell, the head of the Federal Reserve, is scheduled to deliver a speech to Congress where he is expected to provide an update on the status of the US economy and the central bank's monetary policy plans.

Analysts predict that Powell may suggest that recent economic data may require higher interest rates than expected. Investors will be closely monitoring Powell's remarks as any hawkish indications he provides could lead to market volatility.

BoJ Policy Meeting in Focus as Markets Await Key Announcements

In Japan, there has been a concerning drop in real wages in January, with the worst decline seen in over nine years. Data revealed that all cash wages only increased by 0.8% year over year in January, which is significantly lower than the 4.1% growth seen in December.

The Bank of Japan's (BoJ) monetary policy is focused on wage growth, and Governor Kuroda has stated that he will not tighten monetary policy until there is evidence that wage growth, rather than external factors such as commodity prices, is the primary driver of inflation.

Furthermore, Governor Kuroda is set to step down after the BoJ policy meeting on March 10. Many speculate that he will use this opportunity to start policy normalization by revising the Yield Curve Control (YCC).

Despite the recent decline in the USD/JPY pair, yen buyers remain optimistic due to speculations that Kuroda will make significant moves before his departure.

USD/JPY Intraday Technical Levels

Support      Resistance

135.52         136.32

135.04         136.66

134.71         137.13

Pivot:          135.85

USD/JPY  – Technical Outlook

The USD/JPY pair remained steady around the EMA50, with no significant movements since yesterday. The bearish trend scenario remains unchanged, pending a breakout from the correctional bullish channel. The pair is expected to visit levels of 134.55 and 133.30.

The Stochastic indicator shows a loss of positive momentum, supporting the expected decline. Breaking above 136.45 could lead to a rise toward the 137.70 level before further direction is determined.

Today's support level is 135.00, while the resistance level is 136.50.

Daily Price Outlook

The USD/JPY pair is currently trading at $136.66. Raphael Bostic, the president of the Atlanta Federal Reserve, made some cautious comments that appear to have briefly halted the pair's upward momentum.

Jobless Claims Report and Bostic's Comments Affect US Economy and USD/JPY

On Thursday, the jobless claims report indicated a further decline in the number of Americans filing new unemployment claims, reaching 190K instead of the expected 196K. This suggests a continuing improvement in the labor market and may reduce the likelihood of the Fed raising interest rates.

Earlier in the day, the US Dollar was gaining strength. Still, it changed direction in the afternoon when Atlanta Federal Bank President Raphael Bostic said the tightening cycle could end mid-to late-summer. Bostic prefers a rate increase of 25 basis points in March, but he left the possibility of a more hawkish rate outlook if inflation and labor market statistics improve.

As a result, the US Dollar Index (DXY) is now under pressure and trading at 104.89. Later today, the US Institute of Supply Management (ISM) will release the Services PMI (Feb) data, which could significantly impact the US Dollar's movement.

Tokyo Inflation Decreases in February: First Drop in Over a Year

The inflation rate in Tokyo has dropped for the first time in over a year, but this masks a stronger pricing trend that will likely influence the policy decisions of Bank of Japan Governor Nominee Kazuo Ueda. Despite the decrease in February's annual inflation rate from 4.4% to 3.4%, and the core inflation rate from 4.3% to 3.3%, it is unlikely to pressure the Bank of Japan to reconsider its policy outlook.

The recent drop in Tokyo's inflation rate, a leading indicator for the country, suggests that the peak of price growth may have passed in January. However, the new Bank of Japan (BoJ) board supports the current monetary policy. While Kazuo Ueda, the new BoJ Governor nominee, may consider phasing out Yield Curve Control, it could lead to increased optimism for the Japanese Yen.

USD/JPY Intraday Technical Levels

Support      Resistance

136.15         137.25

135.53         137.73

135.05         138.34

Pivot Points:136.63

USD/JPY  – Technical Outlook

Due to stochastic negativity, the USD/JPY pair experienced a temporary decline after reaching the 137.00 level. However, positive signals emerge, indicating a potential resumption of the bullish trend within the upward channel shown on the chart. The EMA50 currently supports the projected bullish wave, which is dependent on the price of above 135.40.

A break below this level could end the positive scenario and push the price down to test the 133.30 regions. The trading range for today is expected to be between 135.60 support and 137.30 resistance.