- Trading last week was mostly bullish for the performance of the USD/JPY pair, with gains reaching the resistance level of 150.88, the highest for the currency pair in three months.
- However, it faced selling pressure after the announcement of Japan's downgrade to the world's fourth-largest economy, and the Japanese yen is considered one of the key safe havens
- . Consequently, the USD/JPY pair was subjected to selling pressure towards the support level of 149.53 before rebounding on Friday towards the resistance at 150.65 and closing around 150.17, indicating that the overall trend for the currency pair remains bullish.
Meanwhile, the discrepancy between the economic performance of Japan and the United States of America and the course of global central banks’ policies will ultimately support the gains of the US dollar.
According to the Economic calendar, consumer sentiment in the United States rose this month following increases in December and January, confirming that Americans are beginning to feel better about the economy after several years of gloom. The U.S. Consumer Confidence Index, released by the University of Michigan last Friday, increased to a reading of 79.6 in February from 79 in January. Moreover, this slight uptick comes after two months of sharp increases, the largest in over 30 years. Shortly, what Americans feel could impact this year's U.S. presidential race, which is likely to heavily focus on President Joe Biden's economic record.
However, consumer sentiment remains 6% below its long-term average after the worst inflation surge in four decades led to increased costs of groceries, rent, gas, and other necessities, dampening the spirits of many consumers.
Overall, an improvement in U.S. consumer confidence often leads to increased spending, which can support economic growth. However, since the pandemic, consumer spending has largely been healthy even when sentiment measures were very low. In recent weeks, most economic data have been positive, indicating that the U.S. economy is still growing, employers are hiring, and inflation is easing. Recently. growth reached 3.3% in the last three months of the previous year, much better than economists expected. U.S. consumer prices rose by just 2.6% in December compared to the previous year, according to the Federal Reserve's preferred inflation gauge, despite a slight increase in the well-known Consumer Price Index in January.
USD/JPY Technical Analysis and Expectations Today:
The price of the USD/JPY pair rebounded last Friday from trend line support at around 149.85 to trade at around 150.26. Therefore, it appears that the currency pair has completed an upward breakout from the descending channel formation. According to performance, USD/JPY has now advanced to trade slightly above the 100-hour moving average line on the hourly chart. Friday's rebound prevented the currency pair from falling to oversold levels of the 14-hour RSI. In the near term, and according to the performance on the hourly chart, it appears that the USD/JPY currency pair has recently completed an upward breakthrough from the formation of the descending channel. Moreover, the 14-hour RSI appears to support a short-term bullish bias, refusing to enter oversold levels. Therefore, the bulls will target extended bounces at around 150.65 or higher at 151.02 resistance. On the other hand, the bears will look to pounce on extended declines at around 149.85 or lower at the 149.50 support.
In the long term, and according to the performance on the daily chart, it appears that the USD/JPY pair is trading within an upward channel. Also, the 14-day RSI appears to support a long-term bullish bias as it approaches overbought levels. Therefore, the bulls will look to ride the current series of gains towards 151.87 or higher to the 153.84 resistance. On the other hand, the bears will look to pounce on profits at around 148.41 or lower at the 146.43 support.
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