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USD/JPY portrays four-day downtrend near 130.50 with eyes on Japan/US inflation clues

  • USD/JPY fades late Friday’s rebound from seven-week low, takes offer to renew intraday bottom.
  • Sluggish US Treasury bond yields, mixed concerns about banking crisis, recession woes underpin Yen’s safe-haven demand.
  • Fed hawks need validation from Friday’s US Core PCE Price Index to retake control.

USD/JPY pleases bears for the fourth consecutive day even as markets remain inactive during early Monday.

The Yen pair’s latest weakness could be linked to the traders’ rush towards the Japanese Yen (JPY) in search of risk safety, as well as looming fears surrounding the banking industry in the US and Europe. It’s worth noting that the recent divergence between the market’s bias about the next moves of the Federal Reserve (Fed) and the Bank of Japan (BoJ) also seems to weigh on the quote of late.

Although Bloomberg came out with inspiring headlines suggesting that the US and European policymakers are up for taming the bank fallouts, International Monetary Fund (IMF) Chief Kristalina Georgieva warned that “risks to financial stability have increased.” Also raising the market’s fears was the news suggesting Russia’s shifting of nuclear weapons near Belarus.

However, Minneapolis Fed President Neel Kashkari flagged fears of US recession and tamed calls for more rate hikes from the US central bank, which in turn exerts downside pressure on the Yen pair.

It should be noted that Friday’s mixed details of the US Durable Goods Orders and Purchasing Managers’ Index for February and March respectively joined the hawkish Fed speak to trigger the USD/JPY pair’s corrective bounce off the multi-day low.

Above all, the escalating chatters of the BoJ’s exit from the ultra-lose monetary policy, in contrast to the Fed’s nearness to policy pivot, directs USD/JPY towards the south.

Amid these plays, stocks in the Asia-Pacific zone trade mixed while S&P 500 Futures rise half a percent to track Friday’s mildly positive Wall Street performance. That said, the benchmark US 10-year Treasury bond yields seesaw around 3.378% while the two-year counterpart picks up bids with mild intraday gains of around 3.797%.

Moving on, USD/JPY pair may seek more clues from risk catalysts amid a light calendar, which in turn suggests further grinding of the quote towards the south. However, Friday’s Tokyo Consumer Price Index (CPI), Japan's Unemployment Rate and Retail Trade will be important for the pair traders to watch for clear directions.

Following that, Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, will be observed closely. Should the inflation numbers print strong outcomes, the greenback has scope for recovery and can allow the USD/JPY to pare recent losses.

Technical analysis

USD/JPY struggles between a 13-day-old resistance line and upward-sloping trend line support from January 16, respectively near 130.75 and 130.55 in that order.

USD/JPY

Overview
Today last price130.6
Today Daily Change-0.12
Today Daily Change %-0.09
Today daily open130.72
 
Trends
Daily SMA20134.28
Daily SMA50132.6
Daily SMA100134.45
Daily SMA200137.41
 
Levels
Previous Daily High130.94
Previous Daily Low129.64
Previous Weekly High133
Previous Weekly Low129.64
Previous Monthly High136.92
Previous Monthly Low128.08
Daily Fibonacci 38.2%130.14
Daily Fibonacci 61.8%130.45
Daily Pivot Point S1129.92
Daily Pivot Point S2129.13
Daily Pivot Point S3128.62
Daily Pivot Point R1131.23
Daily Pivot Point R2131.74
Daily Pivot Point R3132.53

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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