Fundamental analysis USDJPY for 27.03.2024

The USD/JPY pair drifted lower for the third consecutive day, nearing its lowest level since November 2023 against the backdrop of a dovish stance from the Bank of Japan (BoJ) following its recent interest rate hike. Despite the BoJ's move, uncertainty persists regarding future policy steps, with the central bank refraining from providing clear guidance on the trajectory of policy normalization. Verbal interventions from Japanese authorities have served to stem further losses, but the JPY remains under pressure.

 BoJ officials have reiterated their commitment to maintaining an accommodative monetary policy, further weakening the Japanese Yen. Japanese policymakers have expressed concerns about the currency's depreciation, with Finance Minister comments indicating readiness to implement measures to address excessive volatility.

 Meanwhile, the US Dollar remains supported by optimism surrounding the American economy, fueled by doubts about the Federal Reserve's projected interest rate cuts amidst persistent inflation concerns. This positive outlook for the USD bolsters the USD/JPY pair, with expectations of further appreciation.

 And on the other side, the Conference Board reported that its index of U.S. consumer confidence fell to 104.7 in March, little changed from 104.8 the previous month, as recession fears abated.

Additionally, consumer inflation expectations rose to 5.3% this month from 5.2% in February, potentially forcing the Federal Reserve to keep interest rates high for an extended period of time.

 Looking ahead, investors are cautious, awaiting key data releases such as the US Personal Consumption and Expenditure (PCE) Price Index, which could provide further insights into inflationary pressures and influence Fed policy decisions.

 Technical analysis and scenarios:

Given the current price of 151.831, the Alligator indicator suggests that the market is in an uptrend as its hungry mouth (blue line) is located below the lips and teeth (green and red lines). However, the Awesome Oscillator (AO) and Accelerator Oscillator (AC) in the green zone near the zero level indicate a strong buy signal, confirming the initial upside signal from the Alligator.

Main scenario (BUY)

Recommended entry level: 152.000

Take profit: 152.400

Stop loss: 151.600

Alternative scenario (SELL)

Recommended entry level: 151.600

Take profit: 151.200

Stop loss: 152.000