USDJPY at crossroads as inflation data weighs on dollar

٨ ديسمبر ٢٠٢٣

The USDJPY weakened on Thursday, dropping 1.3% to 144.30 JPY. The decline came after US inflation data showed that inflation slowed slightly in November, but still remained at a high level.

From a technical perspective, the USDJPY has reached the resistance level of 145.00 JPY. If the US dollar cannot break above this level, it is likely to continue the downtrend.

From a fundamental perspective, the US Federal Reserve is committed to continue raising interest rates to combat inflation. However, the Bank of Japan's monetary policy remains ultra-loose. This creates a divergence in the monetary policies of the two countries, which could continue to benefit the Japanese yen.

In addition to the factors mentioned above, there are other factors that could influence the USDJPY in the future. One of them is the geopolitical situation. The conflict in Ukraine remains a risk to the global economy, and could lead to increased volatility in financial markets.

Another factor that could influence the USDJPY is the economic situation in Japan. The Japanese economy is slowing down, and this could weaken the yen.

Overall, the USDJPY is at a crossroads. If the US dollar can break above the resistance level of 145.00 JPY, it could resume its rally. However, if the US dollar falls below the support level of 143.50 JPY, it is likely to begin a more prolonged downtrend.

Forecasts for today and next week

For today, the USDJPY is expected to remain in a downtrend. The key support level to watch is 143.50 JPY. If the US dollar falls below this level, it is likely that the decline will continue to 142.00 JPY.

For next week, the USDJPY is expected to remain volatile. The main factors that could influence the US dollar are the US employment figures, which will be released on Friday, and the Bank of Japan meeting, which will take place on Wednesday.

If the US employment figures are strong, they could reinforce expectations that the Federal Reserve will continue raising interest rates. This could benefit the US dollar and help to stop the decline of the USDJPY.

On the other hand, if the Bank of Japan announces new stimulus measures, it could weaken the yen and help the USDJPY to rise.

Possible scenarios

If the USDJPY falls below the support level of 143.50 JPY, it is likely to begin a more prolonged downtrend. In this scenario, the US dollar could fall to 142.00 JPY, or even to 140.00 JPY.

However, if the USDJPY can break above the resistance level of 145.00 JPY, it could resume its rally. In this scenario, the US dollar could rise to 146.00 JPY, or even to 147.00 JPY.