- Recently, the US dollar rose against the pound, euro, and other major currencies after US retail sales for December beat expectations.
- As a result, the USD/JPY pair remained on its current uptrend, with gains extending to the resistance level of 148.52.
- This is the point where we expect speculation to increase about the chance of moving towards the psychological resistance level of 150.00, which would confirm the dominance of the bulls in the trend.
Obviously, the US dollar has renewed interest from buyers after it was revealed that US retail sales rose 0.6% on a monthly basis, beating the consensus forecast of 0.4%. Also, the control group of retail sales rose 0.8% monthly, compared to expectations of 0.2%. Commenting on this, Ali Jaffery, an economist at CIBC Bank, said: "Can anything stop American consumers? It doesn't seem so after another consensus-busting report in December." The strength was broad-based, with increases in 9 out of 13 categories. Some of the biggest increases were led by discretionary categories such as clothing, non-store retailers, and general merchandise.
According to forex market trading, the US dollar is the best-performing major currency in 2024 due to the repricing of expectations for US interest rate cuts. Therefore, investors have delayed the expected timing of the first-rate hike while also expecting lower interest rate hikes than they did at the beginning of the year.
Analysts at Bank of America issued a new research update saying they are still looking for a decline in the US dollar in 2024. In this regard, Alex Cohen, an analyst at Bank of America, said: "While we see a broad-based decline in the US dollar this year, it may take some time, and our expectations call for larger moves in the second half.". Moreover, bank of America expects a normalizing inflation environment and eventual interest rate cuts to allow for a larger decline in the US dollar.
Finally, the analyst ended by saying: "But until we get more evidence that inflation is pointing comfortably towards central bank targets, the timing and pace of the decline in the US dollar can remain less certain."
USD/JPY Technical analysis and Expectations Today:
According to the performance on the daily chart above, the upward trend for the currency pair US Dollar against the Japanese Yen (USD/JPY) is still strongly bullish. As we expected before, the move towards the resistance level of 148.50 over that time will support the bulls’ move to the psychological resistance of 150.00, which in turn will move the technical indicatorstowards their levels. Strong saturation with buying, and selling operations can be activated to reap profits at that time. On the other hand, and over the same period, the upward channel will not be broken without breaching the support level of 145.80. Today, the USD/JPY pair will react to the announcement of the number of weekly US jobless claims. Finally, it will be influenced by the reading of the Philadelphia Industrial Index, and the extent of investors’ appetite for risk.
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