The USD/JPY price held steady on Tuesday morning as investors reacted to the latest Japanese household spending data. It is trading at 115.32, which is about 1% above the lowest level this month.
Japan household spending
The Japanese statistics agency published the latest household spending numbers on Tuesday morning. Household spending rose by 0.1% in December after falling by 1.2% in November. That increase was better than the median estimate of 0.7%.
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On a year-on-year basis, spending declined by 0.2%. These numbers are important because household spending is the biggest constituent of Japan’s GDP.
Additional data showed that Japan’s overtime pay increased by 4.80% in December after rising by 2.80% in the previous month. At the same time, the average cash earnings declined by about 0.2% in December.
These numbers show that the Japanese economic recovery was relatively muted in December partly because of the Omicron variant.
The USD/JPY pair is also reacting to last Friday’s US non-farm payroll data and the potential for more rate hikes by the Fed. The data revealed that the US unemployment rate rose slightly to 4.0% while the economy added more than 467k jobs.
Later this week, the most important catalyst will be the American consumer price index (CPI) data that comes on Thursday. The data is expected to show that the American inflation continue rising in January as energy prices remained at elevated levels.
The USD/JPY price action is a refection of the diverging moves between the BOJ and the Fed. While the Fed is expected to tighten, the BOJ is expected to take its time.
USD/JPY forecast
The four-hour chart shows that the USD/JPY pair held steady during the American and Asian sessions. The pair has already risen by more than 1.70% from its lowest level in February this year. It has also moved slightly above the 25-day and 50-day moving averages while the MACD has been rising.
The most important aspect is that the USDJPY price has formed a triangle pattern that is shown in red. Therefore, since the pair is slightly below the upper side of the triangle pattern, there is a likelihood that it will have a breakout in either direction soon.
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Source: https://invezz.com/news/2022/02/08/usd-jpy-signal-triangle-pattern-points-to-an-imminent-breakout/