USD/JPY grinding back towards 147.00 ahead of US CPI inflation, Fed rate outlook


Share:
  • The USD/JPY is recovering further ground after last week's plunge, but Fed looms ahead.
  • Markets are rebalancing after last week's Yen rocket sparked by hawkish BoJ comments.
  • Fed rate call expected to hold flat, investors to peer into FOMC statement and interest rate forecast.

The USD/JPY has pared back the majority of losses from last week’s Bank of Japan (BoJ)-fueled plunge, pulling back from four-month lows below 142.00 to aim squarely at the 147.00 handle. The pair has walked back around 80% of last Thursday’s declines that were kicked off by an unexpectedly hawkish showing from BoJ Governor Kazuo Ueda, who noted that the Japanese central bank could be set to begin exploring tighter monetary policy as long as wages continue to show firm growth.

Markets completely front-ran the BoJ statements, sending the Japanese Yen (JPY) soaring across the entire FX market space. The USD/JPY plunged nearly 4% top-to-bottom last week, but markets are scaling back their bets as investors pivot to face upcoming US Consumer Price Index (CPI) inflation and an update to the Federal Reserve’s (Fed) Dot Plot of interest rate forecasts.

Fed to hold rates, markets to hinge on dot plot adjustments

With Monday making a thin showing on the economic calendar, markets are focusing on Tuesday’s upcoming US CPI inflation print, which is expected to diverge between monthly and annualized price growth. November’s MoM CPI inflation is forecast to tick upwards from 0.0% in October to 0.1%, and YoY is expected to tick downwards from 3.2% to 3.1%. 

With near-term inflation seen climbing slightly, an unexpected rebound in inflation on the near tail of the curve would undercut broad-market expectations of Fed rate cuts to come sooner rather than later, destabilizing risk appetite currently underpinning the broader market.

Wednesday kicks off with the Japanese Tankan Large Manufacturing Index for the quarter into October, forecast to climb from 9.0 to 10.0, and markets will begin to batten down the hatches ahead of Wednesday’s Fed Monetary Policy Statement and Interest Rate Projections.

With the Fed broadly set to hold rates at 5.5% for the last rate call of 2023, markets will be focusing on the hawkish or bearish lean to the Fed’s statement, as well as the changes to the Fed’s Interest Rate Projections, or Dot Plot, with a press conference from the Fed to follow.

USD/JPY Technical Outlook

The USD/JPY climbed back over the 146.00 price level in Monday’s trading, extending a rebound from 145.00. The US Dollar’s plunge against the Yen saw the pair rebound tightly off the 200-day Simple Moving Average (SMA) just above 142.00.

The USD/JPY’s recent volatility has left the pair with few near-term technical barriers in either direction, and bids are strung across the midrange between the 200-day SMA floor and the technical ceiling at the 50-day SMA rotating bearishly towards the 149.00 handle.

USD/JPY Daily Chart

USD/JPY Technical Levels

USD/JPY

Overview
Today last price 146.13
Today Daily Change 1.14
Today Daily Change % 0.79
Today daily open 144.99
 
Trends
Daily SMA20 148.41
Daily SMA50 149.29
Daily SMA100 147.48
Daily SMA200 142.34
 
Levels
Previous Daily High 145.23
Previous Daily Low 142.5
Previous Weekly High 147.5
Previous Weekly Low 141.64
Previous Monthly High 151.91
Previous Monthly Low 146.67
Daily Fibonacci 38.2% 144.18
Daily Fibonacci 61.8% 143.54
Daily Pivot Point S1 143.25
Daily Pivot Point S2 141.51
Daily Pivot Point S3 140.52
Daily Pivot Point R1 145.98
Daily Pivot Point R2 146.97
Daily Pivot Point R3 148.71

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

AUD/USD deteriorates further and retargets the 2024 low

AUD/USD deteriorates further and retargets the 2024 low

Further weakness saw AUD/USD retreat to new two-week lows in the 0.6490/85 band against the backdrop of the stronger Dollar and the absence of a positive surprise from the RBA’s inflation gauges.

AUD/USD News

EUR/USD puts the 1.0800 region to the test

EUR/USD puts the 1.0800 region to the test

EUR/USD came under renewed downside pressure and revisited the area of multi-session lows near the 1.0800 region amidst further strength in the Greenback and increasing prudence ahead of key data releases on Thursday.

EUR/USD News

Gold extends its consolidation around $2,030

Gold extends its consolidation around $2,030

Gold holds above $2,030 in the second half of the day on Wednesday. The benchmark 10-year US Treasury bond yield corrects lower after rising above 4.3% on Tuesday, allowing XAU/USD to cling to modest daily gains ahead of Thursday's PCE inflation data.

Gold News

Bitcoin price could go into discovery mode now that BTC OTC markets hit six-year low

Bitcoin price could go into discovery mode now that BTC OTC markets hit six-year low

Bitcoin (BTC) price is trading with a bullish bias, recording milestones this week as institutional money floods the crypto markets. Galaxy CEO Mike Novogratz says BTC is now in price discovery phase now the bulk of US wealth has easy access.

Read more

Moment of truth in FX PCE tomorrow

Moment of truth in FX PCE tomorrow

During today's TradeGATEHub Live Trading session, Coach Dale discusses the significance of closing above inter-day spikes in the DXY. He also provides an update on the Rising Wedge pattern in the Dow, as well as his critical threshold for 10-year yields. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures