Overall Japanese economy during this period

In March, Japan's imports exceeded its exports due to higher costs of coal, crude oil, and oil products, as well as a 16.5% depreciation of the yen from the same month last year. As a result, the annual trade deficit reached 21.7 trillion yen ($161 billion), breaking the previous record of 13.7 trillion yen in fiscal 2013, while the March trade balance was a deficit of 7545 billion yen, falling short of the expected figure of 1.29 trillion yen and 897 billion yen from the previous month.

Meanwhile, Japan's exports slowed in March as a result of Japanese exporters shifting production overseas during the prior strong yen, as well as a drop in vehicle and steel exports to China. It emphasized worries over declining global demand in the face of rising interest rates and turbulence in the financial sector in Western countries.

Exports to the United States increased by 9.4 percent year on year in March, down from 14.9 percent the previous month, while exports to China, Japan's largest trading partner, declined 7.7 percent year on year in March, the fourth consecutive month of fall.

Bank of Japan Governor Kazuo Ueda indicated on Tuesday that the central bank's 2% inflation objective will be fulfilled by more easing, as the BOJ continues to buy government bonds (JGBs) as part of its yield control and quantitative easing strategies. He also emphasized the importance of pay increases in Japanese businesses and enterprises in order to spur economic growth.

However, the Bank of Japan remains optimistic about the economy, as wage increases are widespread, even among small and medium-sized businesses, as a result of the growing labor shortage problem and higher inflation, bolstering the central bank's confidence that Japan will be able to meet its 2% inflation target on a sustainable basis.

Sentiment among major Japanese manufacturers continued to deteriorate in April for the fourth consecutive month, owing to rising raw material and other material prices, including energy and animal feed, as well as concerns that Western banking sectors could slow global growth, resulting in a decrease in the trend of export recovery.

However, sentiment in the services sector increased for the second month in a row, reaching its highest level in four months, indicating economic improvement following COVID from a rebound in private and household consumption driven by inbound tourism, which benefits restaurants and retailers.

On the other hand, the US dollar currency pair increased on Thursday as a result of good US banking performance, which has led to the market's confidence that the Federal Reserve will retain its strict monetary policy for some time. The results of the Reuters survey show that analysts believe the Federal Reserve will increase interest rates by their final 25 basis points in May and then leave them steady for the rest of 2023, which will cause the US currency to be stronger than the yen.

Data for Technical Analysis (5H) CFD USD/JPY

Resistance : 134.20, 134.32, 134.50

Support : 133.84, 133.72, 133.54                     

5H Outlook

Source: Investing.com                    

Buy/Long 1 If the support at the price range 133.77 – 133.84 is touched, but the support at 133.84 cannot be broken, the TP may be set around 134.22 and the SL around 133.73, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 134.20 – 134.27, TP may be set around 134.50 and SL around 133.79, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 134.20 – 134.27 is touched, but the resistance at 134.20 cannot be broken, the TP may be set around 133.80 and the SL around 134.31, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 133.77 – 133.84, TP may be set around 133.54 and SL around 134.25, or up to the risk appetite.       

Pivot Points Apr 21, 2023 03:12AM GMT

Sources: Investing 1, Investing 2