Daily Analysis For USD/JPY   12-05-2023

Daily Analysis For USD/JPY 12-05-2023

USD/JPY Analysis
Economic Events and Scenario for USD/JPY
Economic Events: -
04:00(New Zealand) Business Inflation ExpectationsLowNZD
04:35(Japan) 3-Month Bill AuctionLowJPY
06:00(Finland) Current AccountLowEUR
07:00(United Kingdom) Goods Trade BalanceHighGBP
07:00(United Kingdom) GDP YoYLowGBP
07:00(United Kingdom) Goods Trade Balance Non-EUHighGBP
07:00(United Kingdom) Industrial Production MoMMediumGBP
07:00(United Kingdom) Industrial Production YoYLowGBP
07:00(United Kingdom) Manufacturing Production MoMMediumGBP
07:00(United Kingdom) Manufacturing Production YoYLowGBP
07:00(United Kingdom) Construction Output YoYLowGBP
07:00(United Kingdom) Balance of TradeLowGBP
07:00(United Kingdom) GDP Growth Rate YoYHighGBP
07:00(United Kingdom) GDP Growth Rate QoQHighGBP
07:00(United Kingdom) Business Investment QoQMediumGBP
07:00(United Kingdom) Business Investment YoYLowGBP
07:00(United Kingdom) GDP MoMHighGBP
07:00(United Kingdom) GDP 3-Month AvgMediumGBP
07:00(United Kingdom) Construction Orders YoYLowGBP
07:45(France) Inflation Rate YoYMediumEUR
07:45(France) Inflation Rate MoMMediumEUR
07:45(France) Harmonised Inflation Rate MoMLowEUR
07:45(France) Harmonised Inflation Rate YoYLowEUR
08:00(China) FDI (YTD) YoYMediumCNY
08:00(Spain) CPIHighEUR
08:00(Spain) Core Inflation Rate YoYLowEUR
08:00(Spain) Inflation Rate YoYLowEUR
08:00(Spain) Inflation Rate MoMLowEUR
08:00(Spain) Harmonised Inflation Rate YoYLowEUR
08:00(Spain) Harmonised Inflation Rate MoMLowEUR
08:00(United States) Fed Bowman SpeechMediumUSD
09:00(Euro Area) ECB Guindos SpeechHighEUR
10:00(China) Current AccountMediumCNY
11:00(Spain) Consumer ConfidenceMediumEUR
11:00(Latvia) Current AccountLowEUR
12:15(United Kingdom) BoE Pill SpeechMediumGBP
13:00(United Kingdom) NIESR Monthly GDP TrackerLowGBP
13:30(United States) Export Prices YoYLowUSD
13:30(United States) Import Prices YoYLowUSD
13:30(United States) Import Prices MoMMediumUSD
13:30(United States) Export Prices MoMMediumUSD
13:45(Germany) Current AccountLowEUR
14:00(Ecuador) Balance of TradeLowUSD
15:00(United States) Michigan Consumer SentimentHighUSD
15:00(United States) Michigan Inflation ExpectationsLowUSD
15:00(United States) Michigan Consumer ExpectationsLowUSD
15:00(United States) Michigan 5 Year Inflation ExpectationsLowUSD
15:00(United States) Michigan Current ConditionsLowUSD
15:30(Canada) Senior Loan Officer SurveyMediumCAD
17:00(United States) WASDE ReportLowUSD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD

Today's Scenario: - The USD/JPY pair is encountering difficulties in capitalizing on the rebound witnessed from the 133.75 region, which marked a one-week low. Throughout the Asian session on Friday, the pair has been trading within a narrow range and currently hovers just above the mid-134.00s, showing minimal change for the day. The pair's movement is influenced by a combination of conflicting factors.
Market sentiment remains delicate due to concerns surrounding a potential global economic slowdown. This apprehension has been amplified by weaker Chinese inflation data and disappointing US labor market figures released on Thursday. Furthermore, worries about the US debt ceiling add to the overall cautiousness among investors, leading them to seek refuge in safer assets such as the Japanese Yen (JPY). Consequently, this acts as a headwind for the USD/JPY pair. On the other hand, the US Dollar (USD) faces its own challenges as a result of declining US Treasury bond yields, which undermines the currency. This contributes to limiting any potential gains for the USD/JPY pair.

Buy Scenario: - To maintain its upward momentum, the USD/JPY pair needs to stay above the pivot level at 134.34 and aim for the First Major Resistance Level (R1) at 134.93. A breakthrough of Thursday's high at 134.69 would indicate a bullish session for USD/JPY. However, for such a breakout to occur, it is crucial that the market's overall risk sentiment supports a positive outlook for the pair.
If the rally continues, the bulls may set their sights on the Second Major Resistance Level (R2) at 135.44. Further upward movement could lead to a potential test of the Third Major Resistance Level (R3) at 136.03. Till we did not advise to buy in USD/JPY.

Sell Scenario: - On the downside, a decline below the pivot level would bring the First Major Support Level (S1) at 133.83 into play. However, unless there is significant selling pressure on the US Dollar, it is likely that the USD/JPY pair will avoid dropping below the sub-133.50 mark, which coincides with the Second Major Support Level (S2) at 133.24. The Third Major Support Level (S3) is located at 132.73. Till we did not advise to sell the position in USD/JPY.

Support and Resistance Level: -
S1 133.83-R1 134.93
S2 133.24-R2 135.44
S3 132.73-R3 136.03


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