USDJPY: the yen may continue to lose ground against the US dollar

The US and Japan’s PMI data, supported by US jobless claims, could influence the movements of USDJPY. Find out more in our analysis for 24 October 2024.

USDJPY forecast: key trading points

Fundamental analysis

The Manufacturing PMI evaluates the activity of purchasing managers in the industrial sector. It reflects the state of the industrial sector and the dynamics of manufacturing processes in the country. Traders closely monitor changes in this index, as purchasing managers are the first to receive information about their companies’ performance. This makes the PMI a crucial measure of the general economic situation. Readings above 50.0 points indicate industrial growth, while values below 50.0 points suggest a downturn.

The current index reading in Japan was 49.0 points, down 0.7 from the previous value of 49.7. This indicates a decline in production, which is a negative factor for the yen.

Japan’s services PMI reflects consumer spending for all services except industrial production. The index gauges domestic consumer activity and financial well-being. The previous reading was 53.1, while the current value dropped to 49.3. The analysis for 24 October 2024 shows that the PMI has been contracting for the second consecutive month. This decline is unlikely to significantly affect the USDJPY rate, as the Japanese economy is export-oriented.

US initial jobless claims represent the number of people who claimed unemployment benefits for the first time during the previous week. This indicator measures the employment market’s climate, with an increase in initial jobless claims indicating rising unemployment. The previous reading stood at 241,000, and the fundamental analysis for 24 October 2024 does not appear overly optimistic, suggesting an increase in the claims to 243,000. Although the change is not critical, actual data may impact the USDJPY rate.

The forecast for today, 24 October 2024, suggests that the US manufacturing PMI may rise by 0.2 points. Although the reading remains below 50.0, the expected increase could add slight positive momentum for the US dollar.

USDJPY technical analysis

The USDJPY H4 chart shows that the market has completed a growth wave, reaching 153.17. A corrective wave is expected to develop today, 24 October 2024, aiming for 150.75 as the first target. After reaching this level, the price could rise to 151.97 (testing from below). A consolidation range for the USDJPY rate might form at these levels, around the growth wave’s highs. A breakout below the range towards 148.78 is expected, with the growth wave potentially continuing towards 147.47.

Summary

Together with the technical analysis for today’s USDJPY forecast, the actual and projected US and Japan PMI data suggest a potential corrective wave, targeting the 150.75 level.