JPY Japanese yen - The Japanese yen continues to consolidate at low levels and within a narrow range, warning of the risk of central bank intervention

The International Monetary Fund (IMF) said on Thursday that Japan's weak economic performance in 2023 may increase downside risks in 2024. Japan's economy unexpectedly fell into recession late last year, losing the title of the world's third-largest economy to Germany, raising doubts about when the Bank of Japan will begin to exit its decade-long ultra-loose monetary policy.

Bank of Japan Governor Kazuo Ueda said Japan's inflation is accelerating as a tight labor market pushes up wages, and reiterated the central bank's belief that conditions are in place to end negative interest rates. Ueda said the Japanese economy is likely to experience a positive cycle in which job growth and rising wages will drive a moderate rise in inflation.

In terms of technical trends, the US dollar against the yen is challenging an important level in the near future. The Japanese authorities intervened at the end of 2022 to support the yen exchange rate. At that time, the yen once fell to 151.94; this area was tested in November last year, but it just stopped below this area and then fell back. As can be seen from the current chart, the RSI and stochastic index are falling from the overbought area. If the exchange rate fails to break through the 152 level, it is expected that the dollar against the yen may have the opportunity to repeat the downward trend in late November last year. The support level will first be seen at the rising trend line position of 149.50, the greater support will be seen at the 25-day moving average at 148.60, and then we should pay attention to 146.80 and 145.50. On the contrary, if there is a clear breakthrough upward, it is estimated that the extended increase will reach 152.90 and 155 levels.

Forecast range:
Resistance 152.00* – 152.90 – 155.00
Support 149.50 – 148.60 – 146.80 – 145.50

Highlights of the week:
The Japanese government downgrades its view on the economy for the first time since November 2023
Japan cuts consumer spending forecast for first time since February 2022, saying economic recovery has stalled
Japan downgrades view on industrial production for first time since March 2023

Japan's exports in January increased by 11.9% year-on-year, imports fell by 9.6%, and the trade deficit was 176 trillion yen.
Japan’s manufacturing climate judgment index in February was negative 1
Japan's non-manufacturing business sentiment index in February was positive 26

Bank of Japan Governor Ueda remains optimistic about inflation, wage outlook
Japanese Finance Minister Shunichi Suzuki: The government has “no line of defense” against the U.S. dollar/yen exchange rate

IMF believes Japan's economy will face downside risks in 2024

Friday: Japanese holiday

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