USD/JPY Forecast: Holding at lower ground ahead of US CPI

Valeria Bednarik FXStreet

USD/JPY Current price: 108.75

Japan’s Leading Economic Index improved to 103.2 in March, according to preliminary estimates.
US April Consumer Price Index is expected to have risen by 3.6% YoY.
USD/JPY is neutral-to-bearish in the near-term, key support at 108.30.

The USD/JPY pair trades in the 108.70 price zone, posting modest intraday gains but holding within familiar levels. The dollar is taking a breath ahead of the release of US inflation figures. The April Consumer Price Index is expected to have risen by 3.6% YoY, while the core number is expected at 2.3%. The US Federal Reserve has warned about this possible uptick, although policymakers consider it will likely be temporal, and announced they are willing to tolerate it. US Treasury yields are mute.

Nevertheless, concerns mount that the Fed will need to act sooner rather than later. Stocks plunged on Tuesday and remain on the downside ahead of the release of US data. Earlier in the day, Japan published the preliminary estimate of the March Leading Economic Index, which improved to 103.2 from 98.7 previously. The Coincident Index came in at 93.1 from 89.9 in February.

USD/JPY short-term technical outlook

The USD/JPY pair is neutral-to-bearish in the near-term. The 4-hour chart shows that it is hovering around a bearish 20 SMA and a few pips above a flat 100 SMA. The Momentum indicator turned south, currently developing within negative levels, while the RSI consolidates at around 46. The pair bottomed in the 108.30 area twice in May, the level to break to trigger a near-term bearish continuation.

Support levels: 108.30 107.90 107.50

Resistance levels: 108.85 109.25 109.70

View Live Chart for the USD/JPY

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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