The USD/JPY pair is facing challenges in gaining momentum as the trading year of 2023 comes to a close. With thin market activity leading up to the New Year’s long weekend, the US Dollar (USD) has weakened by 0.3% against the Japanese Yen (JPY) on the last Friday of the year. Moreover, the USD/JPY pair has experienced a decline of 1% throughout the week, yet it has managed to achieve an annual increase of 7%.
The recent economic data in the United States has fallen short of expectations, further impacting the performance of the USD/JPY pair. On Friday, the US Chicago Purchasing Managers’ Index (PMI) was released, showing a contractionary figure of 46.9 in December, significantly lower than November’s 18-month peak of 55.8. This result was also below the median market forecast of 51.0.
Surprisingly, the disappointing US data has not deterred broad-market risk appetite. Investors are focusing on the deteriorating global economic outlook, which is pushing the Federal Reserve (Fed) towards implementing more rate cuts in 2024. This shift in sentiment has offered some support for riskier assets, including the USD/JPY pair.
The USD/JPY pair has experienced a primarily negative trend in the latter part of 2023. It reached a yearly high of 151.91 in November, almost matching the peak bids of 151.94 seen in October 2022. However, since then, the pair has gradually declined and is currently hovering near the 140.00 major handle.
Over the past seven consecutive trading weeks, the USD/JPY has closed in the red for all but one week. Moreover, the pair is now approaching bearish territory as it moves below the 200-day Simple Moving Average (SMA) around the 143.00 mark.
As the new year commences, the outlook for the USD/JPY pair remains uncertain. Given the recent downward trend and the lack of any significant technical reversal signals, it is challenging to anticipate a substantial shift in the pair’s direction. However, external factors such as geopolitical events, central bank policies, and economic developments may play a critical role in determining the performance of the USD/JPY pair in 2024.
The USD/JPY pair is currently stuck around the 141.00 level, struggling to gain momentum as the 2023 trading year comes to a close. Weak economic data in the US and a prolonged negative trend have impacted the pair’s performance. As markets head into 2024, the prospects for the USD/JPY pair remain uncertain, making it essential for traders and investors to closely monitor external factors that could influence currency movements.
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