Amidst the Christmas holidays, investor reluctance, and near non-existent liquidity, the USD/JPY price may stabilize around the 142.45 level. It is clearly recovering from the losses of Friday’s session when it hit the support level at 141.85. Currently, the USD/JPY pair is still subject to changes in the direction of central bank policy, with the Bank of Japan and the US Federal Reserve coming closest to tightening policy after a long time. Meanwhile, at the previous meeting, the Bank indicated that it was prepared to cut U.S. interest rates in 2024.
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On the economic front, the United States’ annual GDP in the third quarter exceeded expectations by 5.2%, with a rate of change of 4.9%. In addition, personal consumption expenditure prices for the period were below 2.8%, with a volatility of 2.6%, and basic personal consumption expenditures were below 2.3%, with a volatility of 2%. On another level. Furthermore, the Philadelphia Fed’s December Manufacturing Business Index was -10.5, lower than the expected -3. Finally, new U.S. unemployment claims for the week ending December 16 exceeded expectations by 215,000, bringing the total to 205,000.
In Japan, the Bank of Japan decided to keep its main interest rate unchanged at -0.1%, as expected. Additionally, Japan’s exports in November were -0.2% change, less than 1.5% change in his forecast, while imports were -11.9% change, less than -8.6% change. moreover. The merchandise trade balance for November was negative 776.9 billion yen, exceeding the expected total negative 962.4 billion yen.
The USD/JPY currency pair is currently down and trading just below its 100 hourly moving average. As a result, USD/JPY appears to be on the verge of entering overbought levels on the 14-hour Relative Strength Index (RSI). In the short term, USD/JPY appears to be trading within a descending channel based on the performance on the hourly chart. The 14-hour RSI also suggests a bearish bias as it approaches overbought conditions. Therefore, bearish traders will want to ride the current downtrend below 141.80 and aim for the support at 141.45. On the other hand, bullish traders are looking to take profits near the 142.53 level or above the resistance level at 142.92.
In the long term, USD/JPY also seems to be trading within a descending channel based on its daily chart performance. However, the 14-day RSI has rebounded recently to avoid falling into overbought levels. Additionally, bullish traders will look for an extended rebound near the 144.47 level or above resistance at 146.59. Finally, the bears will look for long-term gains near 139.78 or below the support at 137.43.
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