Japan GDP: Will the Economy Contract?
On Friday, May 16, Japan’s Q1 2025 GDP report will affect the BoJ rate path and USD/JPY trends. Economists forecast Japan’s economy to contract by 0.1% quarter-on-quarter after expanding 0.6% in Q4 2024.
A more marked contraction could end expectations for a 2025 BoJ rate hike, weighing on Yen appetite. However, an unexpected expansion may leave the door open to a 2025 rate hike, bolstering Yen demand. Private consumption, expected to rise 0.3% after stalling in Q4, will be closely watched.
Daily Chart
On the daily chart, the USD/JPY trades below the 50-day and 200-day EMAs, preserving a bearish setup.
A move above the 50-day EMA could open the door to testing resistance at the April 9 high of 148.280. Sustained buying pressure may enable the bulls to target the 149.358 resistance level.
On the downside, a drop below 142.5 could expose 140 and the September 2024 low of 139.576.
The 14-day Relative Strength Index (RSI) stands at 52.58, suggesting room for further gains, with overbought territory beginning above RSI 70.
