At the beginning of this week's trading, the price of the US dollar against the Japanese yen (USD/JPY) recovered to the resistance level of 147.45. Ahead of the release of some major reports this week on the Labor market, which may provide more knowledge about the Federal Reserve's thinking regarding US interest rates. Before that, the USD/JPY underwent strong selling operations that pushed it toward the 146.22 support level, its lowest in nearly three months. Obviously, the US dollar was negatively affected by the decline in US inflation rates below expectations. Furthermore, the Japanese yen receiving positive momentum from indications that the Japanese Central Bank's ultra-accommodative policy is imminent.
Recently, Wall Street markets came out of a strong week and a strong November with hopes that US inflation will decline enough to allow the Federal Reserve to stop raising US interest rates. Investors also hope the economy remains strong enough to avoid a recession. Overall, investors will receive several major updates about the US economy this week, including reports on the services sector and the Labor market.
Today, The ISM Institute will release its November report on the services sector. Clearly, this sector is a major component of the American economy and represents the majority of jobs in the country. Therefore, the report can provide more information about consumer spending and the labor market. Also, Wall Street markets will receive several reports this week focusing on the broader employment picture in the United States of America. Moreover, the US government will issue its October update on job opportunities today. Furthermore, a weekly report on unemployment claims on Thursday.
Closely, Investors will monitor the US government's monthly jobs report for November, which will be released on Friday. Analysts surveyed by FactSet expect US employers to add a total of 175,000 jobs last month. Meanwhile, they expected the country's unemployment rate to remain steady at 3.9%. lately, the Labor market has remained strong in the United States even as the Federal Reserve has raised interest rates sharply to combat inflation by slowing the entire economy. Historically, Inflation has been declining since mid-2023, so the US Central Bank temporarily stopped raising interest rates after its last increase in late July.
Over and above that, Wall Street markets expect interest rates to remain steady until early 2024 when the Federal Reserve could begin cutting interest rates from their highest level in two decades. Shortly, The Fed's next decision on interest rates will come after the conclusion of its next two-day meeting on December 13.
USD/JPY Technical Analysis and Expectations Today:
According to the performance on the daily time frame chart, the price of the USD/JPY is still on a downward correction path. Thus, breaking the support levels 145.45 and 144.00 will support the general downward trend. The bulls will not regain control of the trend over the same period without returning to the 150.00 psychological resistance area again. Therefore, we still prefer to buy the currency pair from every falling level. As, the discrepancy will continue between the US Central Bank’s strict policy and the Bank of Japan, which is taking cautious steps towards tightening. Shortly, the American economic performance is still the strongest, and if global geopolitical tensions increase, the US dollar will become one of the most important safe havens for investors and markets.
