Ahead of the release, the emergence of some US dollar buying assists the USD/JPY to rebound swiftly from the vicinity of the 145.00 mark, or a nearly three-week low touched earlier this Thursday. A stronger GDP print will pour cold water on expectations that the Fed will soften its hawkish stance amid signs of a slowdown in the US economy. This, in turn, will lift bets for more aggressive Fed rate hikes in future and provide a fresh lift to the greenback, setting the stage for some meaningful upside for the major.

Looking at USDJPY’s chart, we can see that JPY gained value this week and the FX pair dropped from the rate of around 152 to 145.20 and bounced to the current one at about 145.88. Today if it holds above the level of 145 we should see it testing its resistance level at about 148.30 otherwise it should fall toward its next support level at around 144.30.

Yesterday (26 Oct), USD lost 1.05% (NY close of 146.35) and downward momentum is building, albeit tentatively. In the coming days, USD could edge lower but at this stage, the odds of a sustained decline below 144.00 are not high. On the upside, a break of the ‘strong resistance’ level at 148.80 would indicate the build-up in momentum has fizzled out.

Conversely, a weaker reading would add to growing market worries about a deeper economic downturn and prompt fresh selling around the buck. That said, a big divergence in the monetary policy stance adopted by the Fed and the Bank of Japan might continue to act as a tailwind for the USD/JPY pair. Investors might also refrain from placing aggressive bets ahead of the BoJ meeting on Thursday, suggesting that the immediate market reaction is more likely to be limited.

USDJPY keeping 143.0 Price in regard for further dips

Oct 27 2022