Japan's economic data shows slight improvement.

The Japanese yen weakened to 149 yen per dollar, as the U.S. dollar remained strong, supported by expectations that President Donald Trump would further increase import tariffs on copper to boost domestic metal production. At the same time, he reaffirmed that tariffs on Canada and Mexico would remain in place when the scheduled one-month review period ends next week. Investors anticipate that the Bank of Japan will continue raising interest rates this year, following a resurgence in inflation in the fourth quarter.

Japan's services PMI rose slightly to 53.1 in February, marking the fourth consecutive month of expansion in the sector. New orders grew at a slightly slower rate, while new export orders continued to expand steadily. This led companies to increase employment levels for the 17th consecutive month, helping them manage their workload effectively. In terms of input cost inflation, production cost inflation declined slightly, though overall costs remained near the previous month’s levels. However, business confidence weakened significantly, reaching a four-year low due to concerns over inflationary pressures and domestic labor shortages.

Meanwhile, Japan's manufacturing PMI edged up slightly to 48.9 in February from January’s 10-month low of 48.7. However, the figure still indicates a contraction in manufacturing activity for the eighth consecutive month. Both output and new orders continued to decline, with a sharp drop in foreign sales forcing companies to cut jobs for the first time since November last year.

Japan's trade deficit widened significantly to 2,758.78 billion yen in January from 1,766.54 billion yen in the same month last year, driven by a sharp increase in imports. Imports surged by 16.7% to a 26-month high of 10,622.52 billion yen, with mineral fuel imports rising by 4.0%, including petroleum and LNG, which increased by 4.1% and 7.1%, respectively. Additionally, machinery imports rose by 18.2%, supported by a 51.2% jump in semiconductor and computer equipment purchases. Country-wise, the highest import increases were recorded from China, India, and the European Union.

On the export side, shipments grew by 7.2% to 7,863.75 billion yen, marking the fourth consecutive month of export growth. The main exports remained automobiles, which rose by 10.5%, while machinery sales saw only modest growth. However, exports of production-related goods contracted by 0.9%, pressured by a slowdown in steel and iron product shipments.

Business sentiment among Japanese manufacturers improved slightly, reaching +3 in February, marking the second consecutive month of growth. The food and chemical sectors were the main drivers of this improvement. However, some sectors, such as paper and steel, saw declining confidence due to reduced profitability. Despite the weaker yen, sales prices only increased slightly, while rising labor and operational costs directly pressured profit margins.

Techical analysis data (5H)

Resistance: 149.57, 149.79, 149.95

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 149.03 - 149.19 but cannot break the support at 149.19, you may set a TP at approximately 149.79 and SL at around 148.81 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 149.57 - 149.79, you may set a TP at approximately 149.95 and SL at around 149.03 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 149.57 - 149.79 but cannot break the resistance at 149.57, you may set a TP at approximately 149.03 and SL at around 149.95 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 149.03 - 149.19, you may set a TP at approximately 148.81 and SL at around 149.79 or according to your acceptable risk.

Pivot point February 26, 2025 08:55 PM. GMT+7