USD/JPY extends rally on hot CPI
The USD/JPY extended its rally following the release of hotter-than-expected US CPI data, which fuelled a surge in bond yields and strengthened the dollar. Headline CPI rose 0.5% month-over-month, surpassing the expected 0.3%, while Core CPI climbed 0.4% versus the 0.3% forecast. On an annual basis, CPI reached 3.0% and Core CPI hit 3.3%, both above expectations. This reinforced market sentiment that the Federal Reserve will delay interest rate cuts, pushing US 5- to 10-year yields at least 10 basis points higher. As a result, traders increased their bets on further USD/JPY gains. The market will now focus on the second day of Powell’s testimony, with PPI data and retail sales still to come later in the week.
From a technical standpoint, USD/JPY has shown resilience, rebounding from support at 151.00 and breaking above the key 200-day moving average near 152.50/60. The pair has cleared resistance at 153.70-154.00, and if it holds above the 200-day average, it could extend its advance toward the significant 155.00 level. However, a failure to maintain this breakout could see support tested back at 153.70, with further downside levels at 152.50/60 and 151.00. With the bullish momentum reinforced by strong CPI data and higher yields, USD/JPY traders will closely watch price action determine if the uptrend can sustain.
By Fawad Razaqzada, market analyst with Forex.com
From a technical standpoint, USD/JPY has shown resilience, rebounding from support at 151.00 and breaking above the key 200-day moving average near 152.50/60. The pair has cleared resistance at 153.70-154.00, and if it holds above the 200-day average, it could extend its advance toward the significant 155.00 level. However, a failure to maintain this breakout could see support tested back at 153.70, with further downside levels at 152.50/60 and 151.00. With the bullish momentum reinforced by strong CPI data and higher yields, USD/JPY traders will closely watch price action determine if the uptrend can sustain.
By Fawad Razaqzada, market analyst with Forex.com
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.