USDJPY rises by 0.3% as market awaits key US inflation data and Fed guidance

USDJPY Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.3%	45.9 Pips
Week to-date	0.38%	57.401 Pips
February	-1.09%	-167.7 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)
Wed 01:30 PM USD CPI Inflation Rate excluding Food and Energy sectors (12-mth)
Wed 03:00 PM USD Federal Reserve Chair Jerome Powell testifies
Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)

What happened lately

The current economic news landscape reveals that there are no major developments or announcements that could significantly impact the market dynamics in the immediate term. However, attention is drawn to forthcoming U.S. economic indicators and events that are anticipated to provide further insight into the economic conditions and potential policy decisions. The U.S. Consumer Price Index (CPI) inflation rate is scheduled for release soon, covering both the overall inflation rate and the rate excluding the volatile food and energy sectors. These high-impact indicators are crucial for assessing the inflationary pressures within the economy and will likely influence market sentiment and monetary policy considerations.

Additionally, the upcoming testimony by Federal Reserve Chair Jerome Powell is another highlight, expected to offer guidance on the central bank’s views regarding inflation trajectories and economic resilience. On the following day, further data on the Producer Price Index (PPI), excluding food and energy, will be released, carrying significant weight in understanding the costs faced by producers, which can eventually trickle down to consumer prices.

The appreciation of USDJPY by 0.3% to 152.42 on Tuesday reflects the market’s current dynamics and sets the tone for currency traders awaiting new economic data. The expectation of key U.S. inflation data raises anticipation in forex markets, with traders potentially positioning for a stronger U.S. dollar if inflation readings come in higher than expected, suggesting future interest rate hikes. Consequently, any signals from Jerome Powell’s testimony supporting a tighter monetary policy stance to combat inflation could further bolster the dollar against the yen. Conversely, if inflation indicators suggest cooling price pressures, it could halt the rally, allowing the yen to gain ground. Thus, the market will closely evaluate these events for cues that could alter the USDJPY trajectory.

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What can we expect from USDJPY today?

USDJPY on Tuesday rose 0.3% to 152.42. Price is below 9-Day EMA while Stochastic is rising.

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

Looking ahead for the day, immediate upside resistance level is R1 at 152.8 with break above could target R2 at 153.18. While towards the downside, we are looking at daily low of 151.65 as an important support. Break below this level could weaken the current bullish momentum. A break above 152.61 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: