- The Japanese economy's contraction in the third quarter of 2023, as well as the continued negative interest rate policy from the Bank of Japan, helped the bulls to rise again, despite weak US inflation numbers.
- Recently, the USD/JPY pair reached the resistance level of 151.38 after selling in the middle of the week reached the level of 150.04.
- Therefore, as we mentioned before, the overall trend for the USD/JPY pair will remain up if it is stable above the psychological resistance level of 150.00.
Disappointing US Data
On the economic side, Americans cut their spending on retail in October, ending six consecutive months of gains, although the decline was partly driven by lower gasoline and car prices. According to an official announcement, US retail sales fell 0.1% last month after jumping strongly by 0.9% in September, according to a report released on Thursday by the US Department of Commerce. Also, the September number was revised upward from an initial gain of 0.7%. Excluding gas and car sales, retail sales rose 0.1%.
Moreover, these numbers reflect a slowdown in consumer spending desire after a turbulent summer. Thus, Consumer spending jumped in the quarter from July to September, but economists expect it to slow in the last three months of the year, with rising credit card debt - and delinquency - and falling average savings. However, the decline was less than analysts expected. Excluding car sales, gas, building materials, and restaurant meals, the so-called "control group" of sales - which is used to calculate economic growth - rose 0.2%, after jumping 0.7% in September. The increase in control sales indicates that consumers still have some remaining purchasing power.
Overall, the latest US data has revealed that the sudden rise in consumer spending was a cause of the strong growth, and that the flexibility of this growth has puzzled economists, and the Federal Reserve. It seems to contradict the tense feelings that Americans themselves have expressed in opinion polls. On the other hand, consumer spending may still be damaged with the resumption of student loan payments, continued rising prices, and the wars raging in the Middle East and Europe. The optional suspension of student loan payments was lifted on October 1st.
What are the price predictions?
Inflation in the United States slowed down last month, suggesting that the Federal Reserve's interest rate hikes may have begun to curb the surge in prices that has weighed on Americans for the past two years. But shoppers still find that the cost of many services, especially rents, restaurants, and healthcare, continues to rise faster than it did before the pandemic.
Americans are also facing higher mortgage costs, car loans, and credit cards, which are a direct result of the Federal Reserve's campaign against inflation. Retailers have reported a slight increase in credit card delinquency rates in recent months.
Forex predictions: Dollar against the Japanese yen up
According to the performance on the daily chart below, the overall trend for the USD/JPY pair remains up. As we mentioned before, the psychological resistance level of 150.00 will remain a strong support for the bulls' control of the trend and encourage the movement towards higher peaks until a Japanese intervention is expected in the markets to prevent further collapse of the yen's price. The nearest resistance levels for the current performance are 151.60, 152.20, and 153.00, respectively.
Finally, as we mentioned before regarding currency price predictions, the USD/JPY pair leads the rest of the currencies against the yen, and these upward breakthroughs for the dollar against the yen are being focused on by Japanese officials, and intervention may occur from them at any time. If this happens, it will bring strong and sharp selling operations to the pair, which will change the direction of the pair to a downward one in a very short time.
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