- US job openings dropped to their lowest in nearly two years in February.
- Japan’s services sector activity expanded at the fastest rate in more than nine years in March.
- Inflationary pressures continue to be a significant downside risk in Japan.
Today’s USD/JPY price analysis is bearish. The US dollar remained close to a two-month low as weak economic statistics supported theories that the Fed is near the end of its tightening cycle.
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US job openings dropped to their lowest in nearly two years in February, indicating that the labor market was finally loosening.
According to a private sector survey released on Wednesday, Japan’s services sector activity grew at its fastest rate in more than nine years in March. This indicates that the post-COVID rebound is picking up steam and offers some relief to a still-weak factory sector.
Last month, the Services purchasing managers’ Index (PMI) increased from February’s 54.0 to 55.0, representing the fastest rate of growth since October 2013.
The survey was a positive indicator of Japan’s post-COVID economic recovery. It provided some balance to the manufacturing PMI, published on Monday, which showed that factory activity was still contracting last month despite some improvement in the downturn.
The average input prices of companies have risen steadily since December 2020, though at a slower rate than they had been since last January. This is due to higher costs for labor, fuel, and other goods, as well as a weaker yen.
Given that official data showed the sharpest increase in inflation in more than 40 years, inflationary pressures continue to be a significant downside risk in Japan.
USD/JPY key events today
Investors are expecting PMI and employment data from the US. The ISM non-manufacturing PMI will show activity in the non-manufacturing sector. The ADP nonfarm employment change will show the state of employment in the private sector.
USD/JPY technical price analysis: Bears retake control below the 30-SMA
The 4-hour chart shows USD/JPY trading below the 30-SMA after a strong break below. The RSI has also crossed below the 50-line, supporting bearish momentum. Bulls had taken control for some time but were stopped at a strong resistance zone comprising the 133.00 and 133.51 levels.
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Bears have shown strength by breaking below the SMA with a big candle. From here, the price will likely retest support levels 131.01 and 130.01.
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Saqib Iqbal
