USD/JPY Daily Chart Analysis – 2024-03-08

USD/JPY has shown resilience in the Asian session, carving out a base at 147.53 before initiating a short-covering rebound, which lifted it back to the vicinity of 148.10. The downward pressure is palpable, as broad-based USD weakness is evident. Technical indicators are leaning towards bearishness, with the pair venturing below key daily moving averages, suggesting a shift in momentum. Resistance is encountered near the descending hourly Ichimoku Kijun line at 148.11 and is further fortified by the 200-Day moving average (DMA) at 148.84, as well as by an overhanging hourly cloud. On the support side, the 100-DMA at 147.62 and the 50-DMA at 147.31 form substantial barriers. 

Fundamental Analysis:

The currency pair is influenced by fluctuations in U.S. Treasury yields, which remain subdued, and a Nikkei index that seems to have decoupled from its typical correlation with the JPY. Despite a slight Nikkei uptick, the yen’s strength remains a focal point. Cross-currency movements against the yen, like EUR/JPY and GBP/JPY, have seen significant recoveries, driven by a generally weaker USD. Additionally, domestic data on Japanese wage hikes has been mixed, leaving market participants to eye the upcoming U.S. jobs report for more decisive guidance.

Overall Market Sentiment:

The sentiment can be quantified as follows:

• 40% Positive: Considering the rebound from the Asian session lows, there is a sentiment of recovery on the horizon, possibly fueled by expectations around the U.S. jobs report.
• 40% Negative: With resistance levels holding strong and a broader USD weakness, there’s a notable bearish sentiment.
• 20% Neutral: Given the mixed data from Japan on wage hikes and a lack of correlation with the equity market, there is some uncertainty in the market sentiment.

The sentiment is currently mixed, with a cautious outlook on whether the USD/JPY will sustain its recovery or succumb to broader market forces and U.S. data expectations