USD/JPY rose after the release of the US inflation report in the United States (US) and cemented the case for a Federal Reserve (Fed) pause on its tightening cycle after increasing rates by 500 basis points since March 2022. At the time of writing, USD/JPY trades at 139.90, shy of challenging the 140.00 mark.
Inflation in the US flashed signs of cooling down in the headline figure, but the core remains stickier. The US Department of Labor revealed the Consumer Price Index (CPI) in May rose by 4% YoY, beneath estimates and less than April’s 4.9%. CPI has printed a lower reading than the previous month for twelve straight months, strengthening the case for a Fed pause.
Nevertheless, core CPI, which excludes volatile items like food and energy, increased to 5.3% YoY, aligned with estimates, but 0.2% below the prior’s month data. Money market futures speculate that Jerome Powell and Co. would increase rates at the July meeting by 25 basis points (bps) to 5.25%-5.50%, as shown by the CME FedWatch Tool, with chances at 58.2%, higher than a week ago.
Following the data release, the USD/JPY seesawed around the 139.00-140.00 area before stabilizing around current exchange rates. Meanwhile, post the US CPI release, US Treasury bond yields are rising, with the 10-year note yielding 3.790%, gaining five basis points (bps), a tailwind for the USD/JPY.
The US Dollar Index (DXY), a measure that tracks the buck’s value against a basket of six currencies, drops 0.34%, exchanges hands at 103.201, its lowest level since May 23, at three-week lows.
The US economic docket will feature May Producer Price Index (PPI), followed by the US Federal Reserve Open Market Committee (FOMC) monetary policy decision and the Fed Chair Powell press conference.
From a daily chart perspective, the USD/JPY pair is neutral to slightly tilted upwards as it sits above the daily Exponential Moving Averages (EMAs). Nevertheless, for a bullish continuation, the USD/JPY must break above the 140.00 mark, so it can threaten the next resistance at the year-to-date (YTD) high of 140.91 before cracking 142.00. Conversely, the USD/JPY could pull back if it breaks below the 20-day EMA at 138.88, exposing as the next demand zone, the month-to-date (MTD) low of 138.42.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.