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Japanese Preliminary GDP measures production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity, and a  reading which is better than the market forecast is bullish for the Japanese yen.

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Wednesday at 23:50 GMT.

Indicator Background

Japanese Final GDP bounced back in Q4 with a gain of 0.4%. No change is expected in Preliminary GDP for Q1, with a forecast of 0.4%. Traders should pay close attention to this indicator, as an unexpected reading can have a significant impact on the movement of USD/JPY.

Sentiments and levels

US key releases continue to underperform – will this trend continue this week? Still, market sentiment remains positive about the US economy, with the Fed  expected to tighten rates later in the year. As well,  the sharp monetary divergence between the US and Japan will likely continue to weigh on the Japanese yen. So, the overall sentiment is neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 122.19, 121.39, 119.88, 118.68, 116.82, and 115.85.

5 Scenarios

  1. Within expectations: 0.1% to 0.7%. In such a scenario, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.8% to 1.2%: An unexpected higher reading can push the pair below one support level.
  3. Well above expectations: Above 1.2%: An unexpected surge in the reading would help the yen, and a second support level might be broken as a result.
  4. Below expectations: -0.4% to 0.0%: A  reading at zero or in negative territory  could cause the pair to climb and break one level of resistance.
  5. Well below expectations: Below -0.5%. A very weak reading would likely hurt the yen, and USD/JPY could break a second resistance level.

For more on the yen, see the USD/JPY forecast.

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