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USDJPY has Returned to Decline

3/23/2023 10:36 AM

The USD/JPY pair is demonstrating a confident decline, developing a corrective impetus formed the day before. The instrument is testing the level of 130.50 for a breakdown, updating local lows from February 10.

The positions of the American currency remain under pressure after the decision of the US Federal Reserve to raise the interest rate by 25 basis points to 5.00%. Some analysts were counting on more "hawkish" comments from the Chair of the regulator, Jerome Powell, but the official did not say anything specific. At the same time, investors' confidence in the assurances of the US Federal Reserve and the Treasury Department that the situation in the banking sector is under control remains at a rather low level. A moderate outflow of capital from regional banks also continues, as depositors fear for the safety of their funds.

On Friday, March 24, February inflation data will be released in Japan. The forecast for the National Consumer Price Index suggests a decline from 4.3% to 4.1%, while the Core CPI may accelerate from 3.2% to 3.4%. Such dynamics are unlikely to put additional pressure on the Bank of Japan to abandon its ultra-soft monetary policy.

In addition, in the March monthly economic report, the Japanese government adjusted its Industrial Production estimate downward for the first time in three months, noting that this was affected by a decrease in global demand in the semiconductor sector. Nevertheless, officials are confident that the national economy will continue to recover steadily against the backdrop of increased consumption and capital spending in the country.

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing from below, reflecting the emergence of ambiguous dynamics of trading in the ultra-short term. MACD is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, having retreated from its lows at the beginning of the week, reverses into a horizontal plane, reacting to the emergence of a "bearish" trend.

Resistance levels: 131.00, 132.00, 133.00, 134.00. | Support levels: 130.00, 129.39, 128.62, 128.00.

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