During Monday's Asian session, USD/JPY is showing moderate growth, continuing the corrective momentum that formed at the end of last week. Quotes are testing the 155.70 level for an upward breakout, while market participants are closely monitoring incoming macroeconomic data and the latest political developments.
A key factor in the pressure on global markets remains the decision of the Donald Trump administration to impose increased import duties of 25% on goods from Canada and Mexico, with the exception of Canadian energy resources, which are taxed at 10%, similar to Chinese products. Although the possibility of postponing this decision was previously discussed, the White House eventually implemented the planned measures, increasing global trade risks. In addition, the American leader hinted at the possibility of similar steps with regard to the European Union. This has already caused a negative reaction from a number of European countries and Canada, which have expressed their willingness to take retaliatory measures. In the event of a further escalation of the trade conflict, the global economy may face a slowdown in growth.
Japan's position and impact on the yen exchange rate
Japanese Finance Minister Katsunobu Kato said the government is carefully analyzing the effects of U.S. trade initiatives and their impact on the Japanese economy. The weakness of the yen has already led to an increase in the cost of imported goods, including food and energy resources, which accelerated inflationary processes in the country. This forced the Bank of Japan to adjust its monetary policy, taking into account the growing risks associated with the cost of living crisis.
Investors also paid attention to the latest macroeconomic data. In January, the consumer price index in Tokyo rose from 3.1% to 3.4%, and the indicator excluding food and energy prices rose from 2.4% to 2.5%. This increases the likelihood of continued harsh rhetoric from the Bank of Japan.
The unemployment rate fell from 2.5% to 2.4% in December, ahead of analysts' forecasts. Retail sales in annual terms showed significant growth from 2.8% to 3.7%, exceeding expectations of 3.2%. However, on a monthly basis, the indicator decreased by 0.7% after the previous growth of 1.9%. At the same time, the Jibun Bank business activity index in the manufacturing sector sank from 48.8 to 48.7 points, although the consensus forecast assumed that the value would remain at the same level.
USD/JPY technical analysis for today
On the daily chart, the Bollinger Indicator shows a transition to a sideways movement, which indicates a decrease in volatility and the absence of a pronounced trend. The indicator bands are narrowing, reflecting market uncertainty
The MACD indicator turns up, forming a buy signal: its histogram tends to the positive zone, preparing to gain a foothold above the zero mark. The stochastic oscillator also shows an upward movement, approaching the middle line.
• A purchase is possible with a confident breakout of the 156.00 level up with a target of 156.90. It is recommended to set the stop loss at 155.50.
• Selling can be considered in case of a return of the "bearish" trend and a breakdown of the support of 154.96 down. In this case, the target will be 153.70, and the stop loss will be placed at 155.50.
Conclusion
Thus, the dynamics of USD/JPY remains influenced by macroeconomic factors and political decisions. Further developments will depend on the reaction of global economies to the protectionist policy of the United States, as well as on the actions of the Bank of Japan in response to inflationary challenges.