I think the operative question to ask right now is who wants to get bullish on USD/JPY? With expectations for the Fed to cut rates later this year and Japanese inflation remaining high, to the point that the Bank of Japan may need to hike rates again, the fundamental backdrop seems ill-suited to the long side of the pair. Nonetheless, USD/JPY has held on quite well as it's currently grasping at the four-month-low from the support established in December.
If the U.S. Core PCE report on Friday comes in below expectation and that data point finally gets below a 2.8% figure, there could be motive on the short side of USD/JPY as US rate cut bets would come further into view. Japanese CPI printed at 4% last week (for January) and that's well above the 3.6% print for December and the 2.9% data point for November. September and October were important for USD/JPY as that's when the carry unwind scenario from last year started to settle, but that was helped along by CPI prints at 2.5% and 2.3%.
With inflation heading back up in Japan, there could be a growing argument for Yen-strength and if we see U.S. inflation finally starting to come down, especially if its from the 'Fed's preferred inflation gauge,' there could be motive for sellers to finally leave support behind in USD/JPY. - js
If the U.S. Core PCE report on Friday comes in below expectation and that data point finally gets below a 2.8% figure, there could be motive on the short side of USD/JPY as US rate cut bets would come further into view. Japanese CPI printed at 4% last week (for January) and that's well above the 3.6% print for December and the 2.9% data point for November. September and October were important for USD/JPY as that's when the carry unwind scenario from last year started to settle, but that was helped along by CPI prints at 2.5% and 2.3%.
With inflation heading back up in Japan, there could be a growing argument for Yen-strength and if we see U.S. inflation finally starting to come down, especially if its from the 'Fed's preferred inflation gauge,' there could be motive for sellers to finally leave support behind in USD/JPY. - js
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Disclaimer
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.