Markets
Fundamental analysis of USD/JPY

Fundamental analysis of USD/JPY

25.01.2024 03:27

Intradía

Fundamental

The USD/JPY currency pair has shown significant volatility over the past week, reflecting the complex interplay between economic indicators and monetary policy expectations in both countries.

One of the main influences on the currency pair is the continuation of the Bank of Japan's monetary policy, which was reinforced by Governor Kazuo Ueda's comments on the abolition of negative interest rates. The PMI for banking services improved in January, rising 1.2 to 52.7, indicating that the Bank of Japan is focusing on the growth of the services sector. In addition, the PMI data also showed an increase in input prices and service sector activity, suggesting that the withdrawal of negative interest rates in April may be supportive.

In the US, much attention is focused on the release of fourth-quarter GDP statistics and weekly unemployment insurance claims data. Economists expect US economic growth to slip to 2% from 4.9% in the previous quarter. The details of this data, especially the dynamics of income, consumer spending and inflation, will have a big impact on the Fed's decision to cut the interest rate in March. A tight labor market could delay an interest rate cut until the second quarter, while rising personal income growth could boost consumer spending and inflation. However, a Fed interest rate hike could lead to a contraction in lending and lower spending.

The market is focused on the release of the U.S. Spending Index, which is the Federal Reserve's main measure of inflation and could affect the pace of interest rate cuts. PCE is rising month after month while annual inflation is falling, which affects the Fed's monetary policy.

Technical Analysis and Scenarios:

The Alligator is currently "sleeping", indicating that there is no clear trend as the moving averages are intertwined with each other. This suggests a period of consolidation or flat movement in the market. The Awesome Oscillator (AO) and Accelerator Oscillator (AC) are in the gray zone, showing divergence. This divergence does not provide a clear signal to open positions, indicating uncertain market momentum.