USDJPY rises 0.3% amid anticipation of US CPI data release

USDJPY Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	0.3%	45.901 Pips
Week to-date	0.33%	50.3 Pips
November	1.12%	169.8 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)

What happened lately

The economic data appears sparse, with no significant reports to alter the market landscape at present. Investors and analysts are left primarily focusing on upcoming events, particularly in the United States, where the latest Consumer Price Index (CPI) inflation rate is due to be announced. This CPI index is a crucial indicator of inflation and reflects the annual change in the price of goods and services, excluding food and energy, that consumers purchase for day-to-day living. Such economic indicators are particularly influential as they shape expectations around the Federal Reserve’s policy direction, especially in considerations of adjusting the interest rate. The importance of the CPI release is underscored by its high impact rating, indicating it could cause volatility in the foreign exchange markets, particularly affecting currency values like USDJPY.

Regarding USDJPY, the 0.3% increase to 153.68 aligns with a broader trend of yen depreciation and dollar strength, partly due to diverging monetary policies between the Federal Reserve in the U.S. and the Bank of Japan. The upcoming CPI announcement holds the potential to further affect this currency pair. If the CPI data shows higher than expected inflation, it could reinforce anticipations of a tightening monetary stance by the Federal Reserve, likely bolstering the U.S. dollar. This would potentially lead to a rise in USDJPY as the interest rate differential between the U.S. and Japan becomes more pronounced, making dollar investments more attractive against the yen. Conversely, if CPI figures are lower than anticipated, it may lead to a reevaluation of the Fed’s tightening cycle, possibly eroding some dollar strength and affecting USDJPY movement negatively. Thus, market participants are likely to closely monitor the CPI data as it unfolds, given its influential role in shaping USDJPY’s near-term direction.

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What can we expect from USDJPY today?

USDJPY on Monday rose 0.3% to 153.68. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for USDJPY looks bullish as the pair ended higher after Monday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 154.13 with break above could target R2 at 154.59. While towards the downside, we are looking at daily low of 152.87 as an important support. Break below this level could weaken the current bullish momentum. A break above 153.95 would suggest bullish bias after recent positive movement.

For the week to-date, take note that USDJPY is mixed as compared to prior week.

Key levels to watch out: