USDJPY a Short Trade with target to 146.80
Japan is going through a consolidation phase against the US dollar, amidst mixed fundamental signals. The softer tone of the Tokyo Core CPI, coupled with a positive risk sentiment, is weakening the Japanese Yen (JPY). Despite subdued price action in the USD, momentum is lacking ahead of US PCE data. The USD/JPY pair has trimmed some of its intraday gains, hovering around 147.60 during Thursday's European trading hours. However, it attempted to recover losses from the previous session after positive US Purchasing Managers Index (PMI) data. Japan's Merchandise Trade Balance for December exceeded expectations, contributing to the strengthening of JPY. The Bank of Japan (BoJ) has maintained existing interest rates and yield curve control policies, with Governor Ueda expressing a strong commitment to achieving the 2.0% inflation target. The US S&P Global PMI reached an 11-month high in January, surpassing forecasts, and the market is cautious ahead of the US Federal Reserve's interest rate decision on January 31, leading to increased demand for the Greenback. While the market has priced in speculation of no adjustment in January, the CME FedWatch tool indicates a notable decline in the probability of a March rate cut, dropping below 40%. This marks a significant decrease from the 80% probability recorded just a month ago. Traders are eagerly awaiting US Gross Domestic Product Annualized (Q4) data on Thursday for further insights into the Fed's potential interest rate trajectory. H4 Chart: I expect a bounce in the supply zone within the highlighted white box, corresponding to the Fibonacci level 62-79, and will look for a confirmation of a bearish structural change at M15. Stay tuned for updates. Greetings and have a great day to everyone from Nicola.
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