All eyes are on whether the current trend of yen and U.S. dollar buying will shift

All eyes are on whether the current trend of buying the yen and the U.S. dollar will shift

23.12.2022

The U.S. dollar strengthened yesterday after the U.S. third-quarter GDP figure, released yesterday, was revised upward from the market forecast of 2.9% to 3.2%. The USD/JPY pair broke through the 23.6% Fibonacci retracement level of the sharp decline triggered by the Bank of Japan’s policy change on the 20th of this week.During today’s Asian session, the pair is trading around 132.656. Since it has also broken above the 10-period moving average (MA) on the 4-hour chart, traders should watch for a continued rebound.

European currencies saw the pound fall against the yen after the UK’s third-quarter GDP, released yesterday, showed negative growth of -0.3%. The GBP/JPY pair fell by approximately 140 pips from 160.253 to 158.775. This price movement stood in contrast to that of the USD/JPY pair. Although the pair has rebounded during today’s Asian session, the daily RSI remains just below 30, indicating room for further decline, so caution is advised regarding a potential drop during the European session.

Today, during European trading hours, we have France’s Producer Price Index at 16:45, Turkey’s Foreign Visitor Arrivals at 17:00, the Philippines’ Unemployment Rate at 18:00, and India’s Foreign Exchange Reserves at 20:30,at 21:00, Mexico’s trade balance; and during U.S. trading hours, at 22:30, Canada’s GDP, U.S. durable goods orders, U.S. personal income, and the U.S. core PCE deflator; at 24:00, U.S. new home sales and the University of Michigan Consumer Sentiment Index; and at 25:00, Canada’s fiscal balance.We will be closely monitoring whether the current currency strength dynamics—with the yen and the U.S. dollar both being bought—will shift on this final day of the week.