Japanese household spending slumped as the recent sales tax has taken a bite out of consumers’ pockets. The indicator fell by 4.8% in December, marking a third straight decline. The estimate stood at -1.7%.
In the U.S., Federal Reserve Chair Jerome Powell told a congressional committee that the Fed did not plan to cut rates anytime soon. Powell added that the Fed had two tools to fight a recession – quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy. Powell said that he believes that the Fed would use both these tools “aggressively should the need arise to do so”.
Key news updates for USD/JPY
USD/JPY Technical Analysis
113.15 was a swing high back in July.
112.73 was an important resistance line in October.
112.25 has held in resistance since December. 111.69 follows.
110.62 has held since May of 2019.
109.73 is fluid, as the pair ended the week just above this line.
108.70 is providing support.
108.10 last saw action in the first week in January.
107.30 (mentioned last week) has provided support since October 2019. 106.61 is next.
105.55 is the final support level for now.
USD/JPY Daily Chart
I remain bullish on USD/JPY
The China coronavirus has damaged the economies of countries with close economic ties with China, such as Japan. The outbreak has hurt tourism, services and other sectors of the Japanese economy. This could spell trouble for the Japanese yen.