Japan shows signs of slight economic expansion.

The Japanese yen has slightly strengthened after weakening earlier in the week. This change came as the U.S. dollar rebounded amid signs that trade tensions between the United States and China were easing. However, concerns remain regarding the independence of the U.S. Federal Reserve. U.S. Treasury Secretary Scott Bessent stated that current tariff negotiations with China have yet to produce sufficient long-term benefits, leading investors to hope that trade conflicts may begin to subside.

Amid earlier concerns about President Trump potentially interfering with the Federal Reserve’s interest rate decisions, investor confidence was boosted when Trump clarified that he had no intention of dismissing Jerome Powell, the current chairman of the Federal Reserve. This statement helped reinforce confidence in the U.S. central banking system. Meanwhile, Japan's economic data has shown signs of recovery following domestic stimulus measures, with private sector activity growing again in April after contracting in March. This recovery was largely driven by strong expansion in the services sector.

Japan’s Manufacturing Purchasing Managers’ Index (PMI) slightly increased to 48.5 in April from a one-year low of 48.4 in March. However, manufacturing activity remained in contraction for the 10th consecutive month. New orders declined sharply over the past year due to heightened tariff concerns, causing many export-focused businesses to cut back on production, reduce purchasing activity, and lower inventory levels. Nonetheless, employment saw a slight increase despite rising production costs.

Japan’s Services PMI rose to 52.2 in April from 50.0 in March, which had been the lowest level in five months. New orders experienced their strongest growth in three months, while foreign demand continued to rise, albeit at a slower pace. This led businesses to resume hiring, although production costs surged, reaching a two-year high. As a result, business confidence for the upcoming year declined.

Japanese Prime Minister Shigeru Ishiba commented on the U.S. tariff measures, stating that they are destabilizing the global economic order. Nonetheless, he reaffirmed Japan’s commitment to cooperating with the United States and expressed readiness to engage in trade negotiations. Japan is also preparing additional measures to mitigate the negative impacts of further tariffs, should the talks not proceed as hoped.

Japan’s 10-year government bond yield edged up slightly to 1.34% as investors shifted towards riskier assets, following signs of easing U.S.-China trade tensions and greater confidence in the U.S. Federal Reserve’s stability. Improved domestic economic prospects have also led investors to speculate that the Bank of Japan may raise interest rates in the near future.

Techical analysis data (5H)

Resistance: 143.02, 143.33, 143.96

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 141.45 - 142.08 but cannot break the support at 142.08, you may set a TP at approximately 143.33 and SL at around 141.14 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 143.02 - 143.33, you may set a TP at approximately 143.96 and SL at around 141.45 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 143.02 - 143.33 but cannot break the resistance at 143.02, you may set a TP at approximately 141.45 and SL at around 143.96 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 141.45 - 142.08, you may set a TP at approximately 141.14 and SL at around 143.33 or according to your acceptable risk.

Pivot point April 23, 2025 09:25 PM. GMT+7