Japanese Yen sticks to intraday gains against USD; BoJ’s dovish stance might cap upside – Crypto News

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• The Japanese Yen strengthens for the second straight day and draws support from a combination of factors. 
• A turnaround in the risk sentiment, along with an upward revision of Japan’s growth estimates, boosts the JPY.
• The BoJ’s dovish stance might cap the JPY and limit losses for the USD/JPY pair ahead of the US macro data.

The Japanese Yen (JPY) scales higher against its American counterpart for the second straight day on Thursday, dragging the USD/JPY pair below the 143.00 round figure during the Asian session. The overnight abrupt sell-off in the US equity markets is seen benefitting the safe-haven JPY, which draws additional support from an upward revision of economic growth estimates by the Japanese government. That said, the Bank of Japan’s (BoJ) decision to maintain its ultra-dovish stance earlier this week might keep a lid on any further gains for the domestic currency.

The US Dollar (USD), on the other hand, continues to be undermined by the growing acceptance that the Federal Reserve (Fed) will start cutting rates as early as March 2024 and contributes to the offered tone surrounding the USD/JPY pair. Meanwhile, expectations that the Fed will eventually pivot away from its hawkish stance drags the US Treasury bond yields to a fresh multi-month low and overshadows the better-then-expected US macro data released on Thursday. This, in turn, does little to lend any support to the buck and supports prospects for further losses. 

The USD/JPY pair, manages to defend the 200-day Simple Moving Average (SMA), at least for now, as traders refrain from placing aggressive directional bets ahead of key inflation figures from Japan and the US on Friday. Japan’s National Core CPI data is due during the Asian session on Friday and will be followed by the release of the US Core Personal Consumption Expenditure (PCE) Price Index. The data will help in determining the next leg of a directional move for the USD/JPY pair. In the meantime, Thursday’s US economic docket – featuring the final Q3 GDP print, Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index – will be looked upon for short-term impetus.

Daily Digest Market Movers: Japanese Yen benefits from reviving safe-haven demand and revised economic growth projections

• The overnight slump on Wall Street, breaking a nine-day winning streak, is seen as a key factor underpinning the safe-haven Japanese Yen and weighing on the USD/JPY pair.
• Japan’s Cabinet Office published its twice-yearly economic outlook and estimated real economic growth rate for fiscal 2023/24 at 1.6%, up from 1.3% seen half a year ago.
• Economic growth projection for the fiscal 2024/25 was also bumped up to 1.3%, slightly higher than the previous estimate of 1.2%, further benefiting the JPY.
• The Bank of Japan’s (BoJ) decision earlier this week to stick to its ultra-loose monetary policy settings should keep a lid on any meaningful appreciating move for the JPY.
• The BoJ also made no changes to its dovish policy guidance, while Governor Kazuo Ueda gave no clear hints on the timing of an exit from the negative interest rates policy.
• The uncertainty over the timing of when the Federal Reserve will begin easing, along with Wednesday’s upbeat US macro data, lends some support to the US Dollar.
• A slew of influential Fed officials recently tried to downplay bets that the US central bank will completely pivot away from its hawkish stance despite still-elevated inflation.
• The Conference Board reported that the US Consumer Confidence Index surged in December by the most since early 2021, to 110.7 from the downwardly revised 101 a month earlier.
• US Existing Home Sales unexpectedly rose in November, by 0.8% from the prior month to a seasonally adjusted annualized rate of 3.82 million units, ending five straight monthly declines.
• Investors are still pricing in the possibility of an early interest rate cut by the Fed in 2024, dragging the US bond yields to a fresh multi-month low and capping the Greenback.
• Traders now look to the final US Q3 GDP print, which, along with the usual Weekly Jobless Claims and the Philly Fed Manufacturing Index, might provide some impetus.
• The market attention will then turn to the release of the National Core CPI from Japan and the US Core PCE Price Index – the Fed’s preferred inflation gauge – on Friday.

Technical Analysis: USD/JPY finds acceptance below 143.00, intraday downfall stalls near 200-day SMA support

From a technical perspective, the recent failures ahead of the 145.00 psychological mark, coinciding with the 38.2% Fibonacci retracement level of the November-December downfall, and the subsequent slide below the 143.00 mark favours bears. That said, it will still be prudent to wait for some follow-through selling below the very important 200-day SMA, currently around the 142.70 region, before positioning for further losses. The USD/JPY pair might then turn vulnerable to accelerate the slide towards the 142.00 mark en route to the 141.75 horizontal support and sub-141.00 levels, or a multi-month low touched last week.

On the flip side, the 143.85 region now seems to act as an immediate strong resistance ahead of the 144.00 level, which if cleared should allow the USD/JPY pair to make a fresh attempt towards conquering the 145.00 mark. Some follow-through buying will suggest that spot prices have formed a near-term bottom and pave the way for a move beyond the mid-145.00s, towards the 146.00 round figure and the 50% Fibo. level, around the 146.40 region.