On Thursday (February 27th), against the backdrop of market risk sentiment, the US dollar maintained a volatile consolidation trend against the Japanese yen. Although the US dollar still shows some support in most major currencies, especially in commodity currencies, recent weak US economic data has led to market sentiment leaning towards risk aversion, making the Japanese yen relatively strong in the overall foreign exchange market.

Fundamental analysis: US economic data drags down US dollar, Japanese yen benefits

The recent poor performance of economic data released by the United States has intensified market concerns about an economic slowdown, particularly in terms of weak consumer confidence and service industry activity. The US Flash Service Purchasing Managers' Index (PMI) released last Friday was lower than expected, followed by the University of Michigan Consumer Confidence Index and the US Consumer Confidence Index released on Tuesday, which also failed to bring positive signals. This series of data has intensified market concerns about whether the Federal Reserve can effectively address inflation, especially as both the US Consumer Price Index (CPI) and Consumer Confidence Index show that long-term inflation expectations are still at a high level. The market is generally concerned that, against the backdrop of an economic slowdown, the Federal Reserve may not be able to cut interest rates in a timely manner to address inflation risks.

With the recent sluggish data performance, the market's attention to the upcoming US non farm payroll data and CPI report has further increased. These data will provide key references for the Federal Reserve's March decision-making. If the employment data continues to be weak, it may exacerbate the market's risk aversion and drive further appreciation of the yen.

In contrast, the Bank of Japan (BoJ) policy has temporarily remained stable, and although the domestic economy in Japan is facing challenges, the yen remains strong under the push of global risk sentiment. In addition, the decline in the yield of US treasury bond bonds has also provided support for the appreciation of the yen. In particular, the decline in the yield of 10-year US treasury bond has made the yen outstanding in the global market.

Technical analysis: USD/JPY maintains range bound volatility, JPY strengthens

From a technical perspective, the US dollar against the Japanese yen is still in a volatile consolidation range. According to recent trends, the USD/JPY fluctuates within the range of 148.55 to 149.75. Despite the rebound of the US dollar, technical indicators show that market momentum has not fully recovered, and the weakness of the US dollar has not yet received solid support.

Analysts point out that although downward pressure on the US dollar still exists, the speed of further decline may slow down due to the oversold state of the market. The current support level is around 148.55, while the key resistance for upward movement is around 150.20. Only when it breaks through 150.20, can the US dollar confirm its strong recovery signal against the Japanese yen. On the contrary, if the price falls below 148.55 again, it may retest the support level of 147.70.

Outlook for the Japanese Yen: The impact of Tokyo CPI intensifies market expectations

The strength of the Japanese yen is mainly due to changes in market risk appetite and expectations that the Bank of Japan may raise interest rates in the future. Although the Bank of Japan has maintained its loose policy in recent times, market expectations for Tokyo CPI data have begun to have a significant impact. It is predicted that the annual rate of Tokyo CPI will slightly decline, but the core CPI excluding food and energy is expected to rise to around 2.0%. The release of this data may intensify market expectations for the Bank of Japan to raise interest rates and further support the appreciation of the yen.

On a technical level, the buying sentiment for the Japanese yen remains strong, despite market expectations that the Bank of Japan's interest rate hike will be moderate. However, the market's bullish sentiment towards the yen has clearly intensified. Currently, the support level for the US dollar against the Japanese yen is in the range of 148.70 to 149.00. Based on recent speculative positions, the market's long positions in the yen have not accumulated excessively, indicating that there is still some room for the yen to rise.

Future trend outlook: After oscillating consolidation, there may be a directional breakthrough

Overall, the trend of the US dollar against the Japanese yen is still in a period of consolidation and may remain within the range of 148.55 to 149.75 in the short term. However, with the upcoming release of US economic data (especially non farm payroll and CPI) and the impact of Japan's Tokyo CPI, market sentiment may undergo drastic changes. Whether the US dollar can break through the upper and lower limits of the range against the Japanese yen will determine the future price trend.

In the coming weeks, if the US dollar continues to be under pressure and fails to effectively break through the resistance above 150.20, the Japanese yen may continue to be supported by market risk aversion and further strengthen. In addition, if US economic data continues to show weakness, it may exacerbate concerns about Federal Reserve policies and drive market funds towards the safe haven asset of the Japanese yen.

Overall, the US dollar against the Japanese yen may continue to fluctuate within a range in the short term, but there are still significant risks in the medium term, especially in the absence of a rebound in US economic data, which could lead to further appreciation of the yen. Investors should closely monitor the upcoming economic data and changes in global risk sentiment, which will have a decisive impact on the future market direction.