- Amidst a bullish consolidation around the psychological resistance of 150.00, investors are awaiting the reaction to the release of the minutes of the last meeting of the US Federal Reserve.
- Recently, the US dollar has been performing well against other major currencies despite the tightening path of the US central bank, which was contrary to expectations of an impending economic recession due to this policy.
The Question: Why the Recession Speculation in the US?
The possibility of a recession in the United States in 2024 remains a subject of speculation. The National Bureau of Economic Research's Business Cycle Dating Committee determines the beginning of a recession retrospectively, considering factors such as high unemployment rates, low incomes, and negative GDP growth rates. Despite successive quarters of negative GDP growth in 2022, the committee has not declared a recession.
For his part, US Federal Reserve Chairman Jerome Powell acknowledges the high risk of economic recession since the Fed's tightening cycle began in March 2022. Moreover, he confirmed that the economy is not currently in a recession. However, unexpected economic shocks, such as a global pandemic, remain an unexpected possibility.
In this regard, Andrew Hollinghurst, chief economist at Citi, told CNBC, “There is a very strong and tempting narrative about a soft landing, but we do not see it in the data.”
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Philip Carlson Slezak, chief global economist at Boston Consulting Group, expects the US economy to see a slow growth year, citing its core strengths such as a strong Labor market and personal finance. The absence of expected interest rate cuts in 2024 will likely disrupt financial markets and trigger a recession, although this scenario is unlikely.
In contrast, a continuing decline in population in Japan by 800,000 people in 2022, the 14th consecutive year of contraction, is constraining economic growth. Clearly, this demographic trend translates into lower levels of production and consumption.
USD/JPY Technical Analysis and Expectations Today:
Generally, the overall outlook for the performance of the USD/JPY pair remains bullish as long as it stays stable around and above the psychological resistance level of 150.00, which provides bulls with enough momentum for further upward movement. Also, technical indicators will trend towards overbought levels if the currency pair moves towards the next important resistance levels at 150.85 and 151.50 respectively. So far, buying the dollar against the yen from every dip remains preferable. Conversely, during the same period, a reversal of the trend will not occur without a move towards the support level of 148.80 again.
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