USD/JPY declines after weak US data, buyers take profits

The UoM Sentiment Index slipped to 77.9, indicating a weakening in US consumer confidence.
The US Dollar seems to consolidate weekly gains following hot inflation data.
The Greenback will close a 1.60% winning week.

Patricio Martín FXStreet

The USD/JPY pair, currently trading at 152.95 with a modest loss of 0.17%. Despite a drop in consumer confidence in the US, indicated by the University of Michigan's (UoM) Consumer Sentiment Index the Greenback will close a winning week, on the back of hot inflation data reported on Wednesday and Thursday.

Consumer confidence in the US weakened in early April, with the UoM's Consumer Sentiment Index edging lower to 77.9 from 79.4 in March. This reading came in below the market expectation of 79. The Current Conditions Index declined to 79.3 from 82.5 and the Consumer Expectations Index fell to 77 from 77.4. The details of the survey also revealed that the one-year inflation outlook climbed to 3.1% from 2.9% in April, while the five-year inflation outlook rose to 3% from 2.8%.

That being said, the US Bureau of Labor Statistics revealed a rise in inflation this week, with the Consumer Price Index (CPI), rising to 3.5% year-over-year in March, up from February's 3.2%. The core CPI, also increased to 3.8% Yoy, matching February's level. In that sense, hot inflation figures fueled a sharp rise in hawkish bets on the Federal Reserve (Fed) and in the US Treasury yields which benefited the USD during the week. As for now, markets seem to have given up on the hopes of a June rate cut and if data validated those bets, the USD may see further upside. Next Monday, the US will release Retail Sales figures from March.

USD/JPY technical analysis

On the daily chart, the USD/JPY pair reveals a sustained trend in positive territory on the Relative Strength Index (RSI). Even with the slight decrease observed back below 70, the dominant trend is bullish and buyers just seem to be correcting overbought conditions. Simultaneously, a reading of green bars on the Moving Average Convergence Divergence (MACD) histogram consolidates the buying momentum thesis.

USD/JPY daily chart

On examining the broader outlook, the USD/JPY reveals a bullish posture. The pair's position above the 20-day, 100-day, and 200-day Simple Moving Average (SMA) portrays a positive short-term and long-term trend.

USD/JPY

Overview
Today last price	153.04
Today Daily Change	-0.24
Today Daily Change %	-0.16
Today daily open	153.28

Trends
Daily SMA20	151.42
Daily SMA50	150.19
Daily SMA100	147.78
Daily SMA200	147.23

Levels
Previous Daily High	153.32
Previous Daily Low	152.76
Previous Weekly High	151.95
Previous Weekly Low	150.81
Previous Monthly High	151.97
Previous Monthly Low	146.48
Daily Fibonacci 38.2%	153.11
Daily Fibonacci 61.8%	152.97
Daily Pivot Point S1	152.92
Daily Pivot Point S2	152.56
Daily Pivot Point S3	152.36
Daily Pivot Point R1	153.48
Daily Pivot Point R2	153.68
Daily Pivot Point R3	154.04

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

GBP/USD clings to 1.3500 amid marginal losses

GBP/USD alternates gains with losses around the 1.3500 neighbourhood on Tuesday. Indeed, Cable struggles to further extend its incipient recovery in a context of continuous instability in the Middle East and modest gains in the Greenback.

EUR/USD remains slightly offered near 1.1530

EUR/USD trades with humble losses in the 1.1540-1.1530 band following the closing bell in Euroland on Tuesday. Indeed, the pair’s tepid decline comes amid the marginal advance in the US Dollar, as traders continue to closely follow developments in the Middle East and gear up for the upcoming US CPI data.

Gold loses the grip below $4,400

Gold retreats from its earlier tops and briefly revisited the $4,350 region per troy ounce on Tuesday. The yellow metal’s modest retracement follows lacklustre gains in the US Dollar and declining US Treasury yields across the curve, all amid steady uncertainty from the geopolitical landscape.

Crypto Today: Bitcoin and Ethereum consolidate, XRP dips as optimism for a US-Iran deal fades

Bitcoin (BTC) maintains a neutral outlook on Tuesday while testing support at $64,000. Investors appear to be sitting on the fence, awaiting a catalyst for a breakout above $65,000.

The inflation narrative is still way more important than the employment story

Core bonds sold off yesterday with the belly of the curve slightly underperforming in the US while European curves showed more of a bear flattening. Daily changes on the US curve varied between +4.7 bps (2-yr) and +6.4 bps (7-yr).

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.