Ella 
Amidst the Christmas holidays and a cautious investor sentiment, the USD/JPY currency pair is expected to maintain stability around the 142.45 mark, recuperating from losses incurred during the previous Friday’s session, where it briefly touched the support level of 141.85. The current trajectory of USD/JPY is significantly influenced by the evolving stances of central banks, with the Bank of Japan showing signs of potential policy tightening after an extended period and the US Federal Reserve indicating a willingness to consider interest rate cuts in 2024.
On the economic front, the United States’ third-quarter annual GDP surpassed expectations, registering a 5.2% change compared to the anticipated 4.9%. However, personal consumption expenditure prices for the same period fell slightly below projections, with a 2.6% change against the expected 2.8%. Additionally, the Philadelphia Fed’s December manufacturing survey fell short of predictions, reporting a reading of -10.5 instead of the anticipated -3. Initial jobless claims for the week ending December 16 also surpassed expectations, coming in at 205,000 against the projected 215,000.
In Japan, the Bank of Japan opted to maintain the key interest rate at -0.1%, aligning with market expectations. November’s Japanese exports and imports diverged from expectations, with exports experiencing a change of -0.2% against the anticipated 1.5% increase and imports showing a change of -11.9% compared to the projected -8.6%. Furthermore, the merchandise trade balance for November exceeded predictions, with a deficit of -776.9 billion Japanese yen against the estimated -962.4 billion Japanese yen.
Technical Analysis and Outlook for USD/JPY Today:
Currently in a declining phase, the USD/JPY is trading just below the 100-hour moving average, indicating a potential entry into overbought territory for the 14-hour Relative Strength Index (RSI). The short-term hourly chart suggests the pair is within a descending channel, with the 14-hour RSI leaning toward a bearish bias as it approaches overbought conditions. Bearish traders may target the downward wave towards 141.80 or lower, while bullish traders eye profits around 142.53 or higher at resistance 142.92.
Long-term analysis based on the daily chart reveals USD/JPY trading within a descending channel, with the 14-day RSI avoiding overbought levels. Bullish traders may aim for extended rebounds around 144.47 or higher at resistance 146.59, while bearish sentiments may target long-term profits around 139.78 or lower at support 137.43. The outlook remains contingent on the nuanced shifts in central bank policies throughout 2024.
