The USD/JPY pair has seen a slight uptick, reaching 145.95 on Wednesday morning after hitting two-week lows. This upward movement, while encouraging, may not indicate a significant trend reversal given the uncertain economic conditions. Market players are treading carefully as they await crucial US employment data for August, which is expected later this week. The outcome of this data release is likely to have a substantial impact on the decisions of the Federal Reserve in the near future.
On the Japanese side, the Bank of Japan (BoJ) has opted to maintain its current policy stance for now, but has hinted at potential adjustments depending on economic performance. The possibility of a December interest rate hike has been floated, showing the BoJ’s commitment to stability amidst economic uncertainties. Recent data from Japan has shown some improvement, with the manufacturing PMI edging up to 49.8 from 49.5, nearing the threshold of 50 that separates contraction from expansion. This positive development may indicate a stabilizing trend in the manufacturing sector.
Looking at the technical analysis for the USD/JPY pair, the H4 chart shows a corrective move up to 147.20 followed by a downward wave towards 144.11. If this level is breached, a correction to 145.66 could be on the cards, with further downside potential to 144.11, and possibly even down to 141.80 and 137.77. The bearish sentiment is supported by the MACD indicator, where the signal line is above zero but showing a sharp downward trend. On the H1 chart, USD/JPY saw a downward movement to 145.66 before consolidating around that level. A break below this consolidation range could signal a continuation of the downtrend towards 144.11, followed by a potential retest of 145.66. The Stochastic oscillator readings also point towards a bearish outlook, with the signal line above 50 but indicating a downward trajectory.
While there are signs of cautious optimism in the USD/JPY pair following the recent uptick, the market remains uncertain amid economic volatility. Traders and investors are closely monitoring key economic data releases to gauge the direction of future trends in the currency pair. The technical analysis also suggests a bearish sentiment, indicating the need for vigilance and risk management in trading USD/JPY.