Published on May 12, 2023

Daily Analysis For USD/JPY 12-05-2023

USD/JPY Analysis

Economic Events and Scenario for USD/JPY

Economic Events: -

GMT	Event	Impact	Currency
04:00	(New Zealand) Business Inflation Expectations	Low	NZD
04:35	(Japan) 3-Month Bill Auction	Low	JPY
06:00	(Finland) Current Account	Low	EUR
07:00	(United Kingdom) Goods Trade Balance	High	GBP
07:00	(United Kingdom) GDP YoY	Low	GBP
07:00	(United Kingdom) Goods Trade Balance Non-EU	High	GBP
07:00	(United Kingdom) Industrial Production MoM	Medium	GBP
07:00	(United Kingdom) Industrial Production YoY	Low	GBP
07:00	(United Kingdom) Manufacturing Production MoM	Medium	GBP
07:00	(United Kingdom) Manufacturing Production YoY	Low	GBP
07:00	(United Kingdom) Construction Output YoY	Low	GBP
07:00	(United Kingdom) Balance of Trade	Low	GBP
07:00	(United Kingdom) GDP Growth Rate YoY	High	GBP
07:00	(United Kingdom) GDP Growth Rate QoQ	High	GBP
07:00	(United Kingdom) Business Investment QoQ	Medium	GBP
07:00	(United Kingdom) Business Investment YoY	Low	GBP
07:00	(United Kingdom) GDP MoM	High	GBP
07:00	(United Kingdom) GDP 3-Month Avg	Medium	GBP
07:00	(United Kingdom) Construction Orders YoY	Low	GBP
07:45	(France) Inflation Rate YoY	Medium	EUR
07:45	(France) Inflation Rate MoM	Medium	EUR
07:45	(France) Harmonised Inflation Rate MoM	Low	EUR
07:45	(France) Harmonised Inflation Rate YoY	Low	EUR
08:00	(China) FDI (YTD) YoY	Medium	CNY
08:00	(Spain) CPI	High	EUR
08:00	(Spain) Core Inflation Rate YoY	Low	EUR
08:00	(Spain) Inflation Rate YoY	Low	EUR
08:00	(Spain) Inflation Rate MoM	Low	EUR
08:00	(Spain) Harmonised Inflation Rate YoY	Low	EUR
08:00	(Spain) Harmonised Inflation Rate MoM	Low	EUR
08:00	(United States) Fed Bowman Speech	Medium	USD
09:00	(Euro Area) ECB Guindos Speech	High	EUR
10:00	(China) Current Account	Medium	CNY
11:00	(Spain) Consumer Confidence	Medium	EUR
11:00	(Latvia) Current Account	Low	EUR
12:15	(United Kingdom) BoE Pill Speech	Medium	GBP
13:00	(United Kingdom) NIESR Monthly GDP Tracker	Low	GBP
13:30	(United States) Export Prices YoY	Low	USD
13:30	(United States) Import Prices YoY	Low	USD
13:30	(United States) Import Prices MoM	Medium	USD
13:30	(United States) Export Prices MoM	Medium	USD
13:45	(Germany) Current Account	Low	EUR
14:00	(Ecuador) Balance of Trade	Low	USD
15:00	(United States) Michigan Consumer Sentiment	High	USD
15:00	(United States) Michigan Inflation Expectations	Low	USD
15:00	(United States) Michigan Consumer Expectations	Low	USD
15:00	(United States) Michigan 5 Year Inflation Expectations	Low	USD
15:00	(United States) Michigan Current Conditions	Low	USD
15:30	(Canada) Senior Loan Officer Survey	Medium	CAD
17:00	(United States) WASDE Report	Low	USD
18:00	(United States) Baker Hughes Oil Rig Count	Low	USD
18:00	(United States) Baker Hughes Total Rig Count	Low	USD

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: -