The inflation rate of Japan has continuously decreased.

The Japanese yen has slightly strengthened after depreciating to over 150.5 yen per US dollar, following reports of slowing inflation and underlying inflation rates. This is considered a positive signal for the overall economy, leading investors to anticipate that the Bank of Japan will continue its accommodative monetary policy for a while longer. However, the yen is still under pressure from disappointing economic growth data.

The inflation rate in Japan decreased by 2.2% year-on-year in January, mainly due to a continuous decline in food inflation of 5.7% from 6.7% in December. The decrease in food prices is primarily attributed to reductions in vegetable and fruit prices. Additionally, the decline in energy prices has also started to affect the costs of various goods and services. The underlying inflation rate, excluding food but including fuel costs, has decreased to 2%, helping to alleviate pressure on the Bank of Japan to raise interest rates and allowing for more stable wage growth.

The Manufacturing PMI decreased again to 47.2 in February from 48.0 in January, indicating a continued slowdown in factory activity due to rapid declines in new orders and foreign sales. This has resulted in reduced production output. Job hiring has also seen the sharpest decline since January 2021, despite signs of slowing raw material costs.

The Services PMI decreased to 52.5 in February from 53.1 in January. Although the PMI figure decreased from the previous month, the service sector continues to grow steadily for the 18th consecutive month, driven by newly established businesses expanding rapidly, leading to significant job creation. However, foreign demand has started to decline after increasing in the previous month.

The yield on Japanese government bonds with a 10-year maturity has decreased to approximately 0.7% due to the latest inflation rate announcement. Investors are awaiting this week's announcements on industrial production figures, retail sales volumes, and unemployment rates to anticipate the future economic situation and condition of Japan.

Techical analysis data (5H)

Resistance: 150.5, 150.74, 150.93

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 149.88 - 150.08 but cannot break the support at 150.08, you may set a TP at approximately 150.74 and SL at around 149.65 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 150.5 - 150.74, you may set a TP at approximately 150.93 and SL at around 149.88 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 150.5 - 150.74 but cannot break the resistance at 150.5, you may set a TP at approximately 149.88 and SL at around 150.93 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 149.88 - 150.08, you may set a TP at approximately 149.65 and SL at around 150.74 or according to your acceptable risk.

Pivot point February 27, 2024 07:46 PM. GMT+7