USD/JPY Continues to Fall After US Retail Sales Miss

Key Takeaways

• Yen gains as Japanese equities rally
• USD/JPY breaks 100‑day moving average
• US retail sales miss fuels dollar weakness
• Upcoming payrolls and CPI could shift Fed stance
• Technical target near 152.27 if downtrend continues

Summary

USD/JPY fell for a second day as Japan’s new lower‑house majority under Prime Minister Fumio Takaichi spurred a rally in Japanese equities and a shift of capital into the yen. The decline was amplified by weak U.S. retail‑sales data and broader dollar selling, while the yen emerged as the top G10 performer. Technical analysis shows the pair slipping through its 100‑day moving average, eyeing the 200‑day level near 150.39 and a potential drop to the January low of 152.27. Upcoming U.S. payrolls, CPI and Fed policy decisions could further influence the trend.

Pulse Analysis

The Liberal Democratic Party’s victory in the lower‑house election, delivering a two‑thirds majority for Prime Minister Fumio Takaichi, has injected fresh confidence into Japan’s equity markets. The Nikkei index surged roughly 7 % over two sessions as investors anticipate a more decisive fiscal agenda and potential structural reforms. That optimism translated into a rapid rotation from the U.S. dollar into the yen, pushing USD/JPY lower for a second consecutive day. Analysts view the political win as a catalyst that could sustain yen appreciation, especially if the government follows through on stimulus promises. At the same time, the United States is grappling with a string of soft macro indicators that have eroded dollar momentum. Yesterday’s retail‑sales report fell short of expectations, and a series of secondary employment figures showed disappointing trends. Traders are now eyeing the December non‑farm payrolls, where consensus forecasts a modest 70 K increase—far below the market’s recent optimism. An early look at the Atlanta Fed’s GDPNow model suggests Q4 growth may settle just under 4 %, reinforcing the narrative of a slowing economy. Together, these data points keep pressure on the greenback and support yen gains. From a technical standpoint, USD/JPY has slipped through its 100‑day moving average and now eyes the 150.39 level of the 200‑day average, with the next resistance near the January low of 152.27. Should the pair breach that threshold, further downside could be triggered by Friday’s CPI release and any dovish tone from the Federal Reserve. Market participants therefore monitor both Japanese policy cues and U.S. inflation data to gauge the yen’s trajectory. The convergence of political stability in Japan and weakening U.S. fundamentals creates a compelling case for continued yen strength in the near term.