USD/JPY remains under pressure from this week’s US inflation figures despite worrying weakness in Japanese growth
Learn the ins and outs of trading USD/JPY - a pair crucial to international trade and a well-known facilitator of the carry tradeThe Japanese Yen made sharp gains on the United States Dollar in Asia on Thursday but has already returned some of them as investors digest fascinating economic numbers from both sides of the USD/JPY pair.
However, on Thursday came news that Japan’s economy remains stuck in the doldrums. First quarter Gross Domestic Product fell by an annualized 2%. That was much worse than the 1.5% expected. It was also bad news for the monetary authorities in Tokyo who’d dearly like to move away from the ultra-low interest rates that have characterized Japan for decades.
Still, for now the ‘weak Dollar’ story seems to be winning out, with USD/JPY having fallen by nearly three full yen at times in the past two days. But pending more data the jury must be seen as out on higher Japanese interest rates. This is likely to leave the Yen vulnerable to the better returns available across developed market currencies.
Breaks below that are likely to be held at the 50-day moving average, which is where the market bounced on its last big foray lower. That now offers support at 152.60, with further channel support below that at 152.086.
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