Solid News

February Statistics Recorded a Slowdown in Inflation in Japan

3/27/2023 10:54 AM

The USD/JPY pair is trading with mixed dynamics, consolidating near 130.50. The instrument ended last week's trading with a moderate decrease, having updated the local lows of February 3. At the same time, last Friday the positions of the American currency received support after the publication of strong data on the dynamics of business activity indices in the US for March. The Composite PMI from S&P Global rose from 50.1 points to 53.3 points with a neutral outlook, but Durable Goods Orders fell 1.0% in February after a sharp 5.0% decline in the previous month, while analysts had expected a gain of 0.6%. At the same time, Nondefense Capital Goods Orders excluding Aircraft added 0.2% after rising by 0.3% in January.

Friday's statistics from Japan reflected a noticeable slowdown in the National Consumer Price Index in February from 4.3% to 3.3%, while the forecast was at 4.1%. At the same time, Core CPI excluding Food and Energy rose from 3.2% to 3.5%, while experts had expected 3.4%. In addition, the Manufacturing PMI from Jibun Bank in March rose from 47.7 points to 48.6 points, which was better than analysts' forecasts at 47.5 points. Despite improved performance, consumer price growth remains well above the Bank of Japan's target of 2.0%. Food and basic necessities are the most expensive, but investors hope that under the new Governor of the regulator, Kazuo Ueda, officials will move away from the ultra-loose monetary policy and begin to adjust interest rates. Preliminary March data on business activity were mixed: the Manufacturing PMI rose from 46.7 points to 48.6 points, but remained in the stagnation zone, and the Services PMI increased from 54.0 points to 54.2 points.

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic reversed into a horizontal plane near the level of "20", indicating remaining risks of the US dollar being oversold in the ultra-short term.

Resistance levels: 131.00, 132.00, 133.00, 134.00. | Support levels: 130.00, 129.62, 128.62, 128.00.

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