USD/JPY at 151.25 Amid Inflation, Fed Signals

Key points:

• USD/JPY trades at 151.25, experiencing a marginal decline of 0.09%.
• The US Core PCE Price Index moderates inflation, with a monthly increase of 0.3% and a yearly cool down to 2.8%.
• Technical analysis indicates a consolidation range, with potential movements highlighted.

The USD/JPY currency pair showcases how economic indicators and technical analysis interplay and influence market movements. Facing fluctuating inflation and stern Federal Reserve policies, the duo manoeuvres a realm of both hurdles and prospects.

USD/JPY Slides 0.09%, PCE Index Shows 0.3% Rise

The USD/JPY trades at 151.25, a slight decline of 0.09%. The latest US Core PCE Price Index data, indicating a 0.3% month-over-month rise, subtly suggests moderating inflation. Yearly, the index cooled from 2.9% to 2.8%, further evidencing a potential stabilisation of inflationary pressures. Nonetheless, the headline inflation rate year-over-year increased marginally from 2.4% to 2.5%, suggesting a nuanced economic environment. The Consumer Price Index (CPI) and Producer Price Index (PPI) further support the notion of entrenched inflation above the 3% threshold, posing challenges and considerations for policymakers.

Fed’s Hawkish View: No Rate Cuts Signaled

Fed Governor Christopher Waller’s recent hawkish comments underscore a steadfast approach to monetary policy, with the Federal Reserve not rushing to cut rates amidst current economic conditions. Upcoming comments from San Francisco Fed President Mary Daly and Fed Chair Jerome Powell are highly anticipated, as they could provide further clarity on the Fed’s outlook. The labour market also shows signs of re-tightening, with fewer Americans filing for unemployment benefits, indicating enduring economic resilience.

Technical Outlook: USD/JPY Aims for 153.00

The USD/JPY’s current technical landscape presents a consolidation range between 151.15 and 151.60. Potential interventions from Japanese authorities could influence market dynamics, mindful of excessive volatility. A push above 152.00 could pave the way to 153.00, highlighting potential upside movements. Conversely, a failure to hold prices above key levels could signal a downturn, with the first support level identified at the Tenkan Sen at 150.49 and the second at Senkou Span A at 149.86.