The USD/JPY pair is grappling with downward pressure, trading heavily below the 152.00 mark in Asian markets this Monday. As the odds of Kamala Harris securing a victory in the upcoming U.S. presidential election rise, the U.S. dollar is witnessing a significant sell-off. This potential policy continuity is being interpreted as negative for the dollar, which is dragging the currency pair lower.
Current Market Dynamics
As of Friday, USD/JPY hovered around 152.40, but daily chart analysis indicates a weakening bullish bias after breaking below its ascending channel. Despite this downturn, the 14-day Relative Strength Index (RSI) remains slightly above the 50 threshold, indicating that some bullish momentum persists. Traders are closely monitoring this indicator, as it could suggest potential price reversals if the pair manages to regain its footing.
Resistance levels are forming at 152.50, the lower boundary of the ascending channel. If USD/JPY successfully re-enters this channel, it may aim for the upper boundary around 158.30. On the flip side, should the pair continue its downward trend, support could be found around the 14-day Exponential Moving Average (EMA) at 151.50, with further psychological support at the key level of 150.00.
Japanese Yen Strengthens Amid Economic Indicators
The Japanese yen recently retraced some of its gains following the release of the Manufacturing Purchasing Managers Index (PMI) by Jibun Bank and S&P Global. The headline Jibun Bank Japan Manufacturing PMI fell to 49.2 in October, down from 49.7 in September. This decline highlights that Japanese manufacturing continues to face challenges at the start of the fourth quarter of 2024, with both output and new order inflows decreasing at a faster rate.
Market analysts are also paying close attention to comments from Bank of Japan (BoJ) Governor Kazuo Ueda, who hinted at a potential rate hike in December during a recent meeting. Such expectations have contributed to the yen’s strength, complicating the outlook for USD/JPY.
Japan’s Chief Cabinet Secretary, Yoshimasa Hayashi, expressed optimism that the BoJ would work closely with the government to implement appropriate monetary policies aimed at achieving its inflation target in a sustainable manner. This commitment to stable economic policy may bolster investor confidence in the yen, potentially affecting the USD/JPY exchange rate.
Also read : Is The Japanese Yen’s Rise Sustainable? Analyzing JPY Strength Against A USD Weakened By 12,000 New Jobs.
Looking Ahead: NFP and Market Sentiment
As the week unfolds, traders are eagerly awaiting the U.S. Nonfarm Payrolls (NFP) report due this Friday. Current projections indicate that the U.S. economy may have added 113,000 jobs in October, while the unemployment rate is expected to remain stable at 4.1%. The market’s reaction to this data could significantly influence USD/JPY’s trajectory.
In conclusion, the USD/JPY pair faces a complex interplay of factors as it navigates below the 152.00 threshold. With rising political uncertainties and mixed economic signals, traders must remain vigilant. A potential breakthrough at resistance levels could signal a recovery, while continued bearish pressure may lead to a test of lower support levels. As always, staying informed and agile will be crucial for navigating these turbulent waters.
