- Consumer spending in Japan fell for a 13th month in March.
- Economists in a Reuters poll expect Japan’s economy to shrink in Q1.
- There was an unexpected increase in initial US jobless claims last week.
The latest USD/JPI price analysis points to a bullish trend as the yen weakens following a decline in Japanese consumer spending in March. The disappointing report clouded the outlook for a potential rate hike by the Bank of Japan.
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Data on Friday showed that consumer spending in Japan fell for a 13th month in March. Weak spending could be a sign that consumers aren’t earning as much. As a result, prices will remain low, raising the prospect of a rate hike by the Bank of Japan. In the previous session, data revealed that real wages in Japan fell for two years in a row, another challenge for the Bank of Japan.
Meanwhile, economists polled by Reuters expect Japan’s economy to contract in the first quarter of 2024 due to weak demand. All of this is down for the yen, which is struggling with a weak position against the dollar.
Notably, most major currencies rose against the dollar overnight after poor US jobs data. However, the yen remained weak, raising concerns that Japanese authorities could intervene again to support their currency.
Data on Thursday revealed an unexpected increase in initial U.S. jobless claims, raising hopes among policymakers that the labor market is finally cracking. Recent labor market data surprised and increased bets that the Fed will cut rates in September. Moreover, there is a higher chance that the central bank will implement two rate increases in 2024.
USD/JPI Key Events Today
- UoM consumer sentiment in the US
USD/JPI Technical Price Analysis: Bulls Rest After Strong Move to 156.00 Level
On the technical side, the USD/JPI price paused below the 156.00 resistance level. However, the bullish bias is strong as it is trading above the 30-SMA with the RSI in the bullish region above 50. This break comes after an impulsive move that saw the price break out of its bearish channel.
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The bulls have paused for a rest as the 30-SMA catches up with the price. Once that happens, USD/JPI is likely to break above 156.00 to retest the 158.00 resistance level. The bullish bias will remain if the price remains above the 30-SMA.
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