During last week's trading, the price of the US dollar against the Japanese yen (USD/JPY) was exposed to strong and sharp selling operations amid strong signals from the Central Bank of Japan that it is close to finally tightening its policy and abandoning negative interest rates. Recently, USD/JPY selling reached the support level of 141.63, the lowest for the currency pair in four months. Thus, it recovered at the end of the trading week to the level of 145.21 following the announcement of stronger than expected US job numbers.
Before that, it was announced that Japan's GDP for the third quarter exceeded the expected change (on a quarterly basis) by -0.5% with a change of -0.7%. The deflated GDP for this period also fell to -2.1% with a change of -2.9%, while the GDP deflator grew by 5.3% compared to 5.1% in the previous update. Meanwhile, total household spending for October exceeded the expected change of -3% with a change (y/y) of -2.5%, while the current account balance exceeded the non-seasonally adjusted 1,901.2 billion yen to 2,582.8 billion yen.
In the United States of America, the country's employers added a total of 199,000 jobs last month and the unemployment rate fell, which are new signs that the American economy could achieve an elusive “soft landing,” as inflation will return to the US Federal Reserve’s target of 2%. Without causing a severe recession, last Friday's report from the US Department of Labor showed that the country's unemployment rate fell from 3.9% to 3.7%. therefore, which is not much higher than its lowest level in five decades at 3.4% in April. Therefore, the country's unemployment rate has now remained at less than 4% for nearly two years, the longest such period since the late 1960s.
US job gains were increased last month by the return of about 40,000 previously striking auto workers and actors, who were not on the job in October but returned to work in November. The latest jobs report and other recent data depict an economy and Labor market that, while still strong, are turning back to pre-pandemic standards. Meanwhile, companies are hiring but are less desperate to fill large numbers of jobs. Thus, more Americans have come off the sidelines to look for work, and immigration has jumped this year. As a result, employers have become easier to hire, with fewer complaints of worker shortages and less pressure to raise wages aggressively, which could fuel US inflation.
USD/JPY Technical analysis and Expectations Today:
several levels below the 100-hour moving average line despite the bounce. Last Friday's rebound helped the currency pair recover from oversold levels of the 14-hour RSI. In the near term, and according to the performance on the hourly time frame chart, it appears that the USD/JPY currency pair is about to complete the formation of a double bottom reversal pattern. The 14-hour RSI also appears to support a reversal after recovering from oversold levels. Therefore, the bulls - the bulls - will target the extended bounce profits at around 144.90 or higher at the 145.40 resistance. On the other hand, the bears will look to pounce on profits at around 143.62 or lower at the 143.00 support.
In the long term, and according to the performance on the daily chart, it appears that the USD/JPY currency pair is trading within a descending channel. The 14-day RSI also appears to support a long-term bearish bias as it approaches oversold levels. Therefore, the bears will look to ride the current decline towards 141.52 or lower to the 138.92 support. On the other hand, the bulls will look to pounce on potential bounces at around 146.69 or higher at 149.45 resistance.
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