USD/JPY - Outlook on USDJPY - 09/18/2024 (GMT)

Technical Perspective:
USDJPY rebounded above the 140.00 psychological support, a low seen in December last year. However, the price remains under pressure, holding below the Ichimoku cloud and 143.00 resistance.
If USDJPY sustains its bearish momentum with a reversal below 143.00, a further decline to retest the 140.00 support and descending channel's lower bound might occur. Meanwhile, a break below 140.00 could prompt further weakness, with 137.00 as the next potential support. Conversely, if USDJPY breaks above 143.00, a further rise toward the channel's upper bound and 61.8% Fibonacci retracement near 144.50 might occur.

Fundamental Perspective:
U.S. retail sales unexpectedly rose by 0.1% in August, defying forecasts of a 0.2% decline, leaving markets divided over a 25 or 50 basis point rate cut by the Fed. The Fed's communication could impact the yen's trajectory, as a dovish stance may lead to further USD/JPY weakness.

The Japanese yen's recent rebound amid expectations of narrowing interest rate differentials raises concerns for Japanese exporters as it could erode export competitiveness. On Friday, the Bank of Japan is expected to maintain current rates in its meeting, but investors will be vigilant for any hints of future hikes. Additionally, Japan's export growth has slowed, particularly in shipments to the U.S., and a widening trade deficit presents challenges, even as the tech sector remains resilient.

Analysis by: Li Xing Gan, Financial Markets Strategist at Exness