The USD/JPY pair fell as US GDP growth slowed to 2.3%, below expectations, while the Japanese Yen strengthened amid policy divergence between the Bank of Japan and the Federal Reserve.
The USD/JPY currency pair experienced a decline in early trading during the North American session following the release of economic data that revealed the US economy grew at a slower rate than anticipated. The pair was trading at 154.09, down 0.76% from its previous value. The US Gross Domestic Product (GDP) for the last quarter of 2024 fell from 3.1% to 2.3%, falling short of investors' expectations of 2.6%.
Concurrently, the US Department of Labor reported an increase of 207K in Jobless Claims for the week ending January 25, which was lower than the projected 220K and the previous week's figure of 223K. Although the USD/JPY initially dipped towards 153.83 after the data release, buyers managed to regain control and push the pair back above the 154.00 level. The Japanese Yen strengthened against other currencies due to a divergence in monetary policy stances between the Bank of Japan (BoJ) and the Federal Reserve (Fed). While the Fed opted to maintain interest rates unchanged, the BoJ has persisted with a tighter monetary policy. This divergence in policies has contributed to the appreciation of the Japanese Yen. Experts predict further declines in the USD/JPY as the US GDP data could signal a potential deceleration in the US economy. This week, investors will be looking at various economic indicators from both Japan and the United States. Japan's economic calendar includes the release of the Unemployment Rate, Industrial Production, and Retail Sales figures. In the US, the focus will be on the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, along with speeches from Fed officials. Technically, the USD/JPY has moved below the Ichimoku Cloud (Kumo), indicating a strengthening bearish sentiment. The Relative Strength Index (RSI) also supports the bearish outlook. To confirm a continuation of the downward trend, sellers need to break through the Senkou Span B at 153.76. This could propel the USD/JPY towards the 200-day Simple Moving Average (SMA) at 152.85 and subsequently the 100-day SMA at 152.22.
USD/JPY US GDP Yen Boj Fed Monetary Policy Economic Data Forex
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