USD/JPY Price Outlook: Remains steady at important support around 152.00

On Wednesday during European trading, the USD/JPY pair saw a slight increase of 0.27%, hovering around 153.70. The Japanese yen has gained strength, even as it lags behind major currencies. This shift comes amid expectations that Prime Minister Sanae Takaichi will unveil significant spending initiatives in the upcoming fiscal budget aimed at stimulating economic growth.

Typically, a rising budget deficit can make a national currency less appealing.

Rumors about a substantial spending plan from Prime Minister Takaichi intensified after Japan’s fourth-quarter gross domestic product (GDP) growth fell short of forecasts. Recent data indicated a mere 0.1% economic growth, while analysts had anticipated a 0.4% rise. Notably, Japan’s GDP had already contracted by 0.7% in the previous quarter before bouncing back.

Looking ahead, the key focus for the Japanese yen will be the release of the national consumer price index (CPI) data for January, scheduled for Friday. It’s projected that the annual increase in fresh food prices will be around 2%, a slowdown from December’s 2.4%.

Meanwhile, the US dollar has also seen a slight uptick as investors await the Federal Open Market Committee (FOMC) minutes from its January policy meeting, set to be disclosed at 7 PM Japan time.

Technical analysis of USD/JPY

During Wednesday’s European session, the USD/JPY climbed to 153.57. However, the price remains below the 20-day exponential moving average (EMA) of 154.73, indicating a bearish sentiment, as this moving average acts as immediate resistance.

The 14-day Relative Strength Index (RSI) stands at 41.35, which suggests a bearish trend and indicates that upward momentum is waning.

If the daily closing price exceeds the 20-day EMA at 154.73, selling pressure might lessen, potentially allowing for a corrective rebound toward the high of 157.66 seen on February 9. Conversely, should the price fail to recover, any rally could be capped, and the pair may experience continued selling pressure. If the RSI approaches 30, the downward momentum may intensify. A drop below the January 27 low of 152.00 could signal further declines toward the psychological mark of 150.00.