|

USD/JPY recovers amid improving US consumer sentiment but easing inflation caps gains

  • USD/JPY recovered some ground but remained in danger of losing its early gains due to the slowing pace of inflation in the United States.
  • The pair saw a brief uplift as a report from the University of Michigan indicated improved Consumer Sentiment, posting a two-year high.
  • Rising household inflation expectations and speculation on adjustments to Yield Curve Control put pressure on the Bank of Japan.

USD/JPY recovers some ground but remains at the brisk of erasing most of its earlier gains after data from the United States (US) continued to show inflation is decelerating. At the same time, an improvement in US consumer sentiment lifted the pair towards its daily high of 139.15 before reversing its curse. The USD/JPY is trading at 138.47 after hitting a daily low of 137.21, up 0.31%.

USD/JPY trims losses on upbeat US data but inflation data on the US warrants less Fed tightening needed

The USD/JPY jumped during the latest hour after a report from the University of Michigan (UoM) saw an improvement in Consumer Sentiment, which was expected to print 65.5 but came at 72.6m at a two-year high. Joanne Jsu, the UoM Surveys of Consumers Director, said, “The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets.” Additional data showed that inflation expectations for one year were upward revised to 3.4% from 3.3% in June, while for a five-year period, they were 3.1%, up from 3%.

Other data the US Department of Labor revealed showed US Import and Export prices slowed down, falling below the estimates in annual and yearly figures for June. The report aligned with the recent inflation data on the consumer and producer side, with numbers justifying the case for the US Federal Reserve (Fed) to keep rates unchanged if they want to, as prices are accelerating towards the Fed’s 2% goal. Nevertheless, Fed policymakers stressed that the battle against inflation has not been won, suggesting further tightening is needed.

US Treasury bond yields are recovering some ground, as the 10-year Treasury note rate sits at 3.793%, up two basis points, a tailwind for the greenback. The US Dollar Index, a measure of the dollar’s performance against a basket of peers, stopped its drop at 99.809, gaining 0.03%.

On the Japanese front, a Bank of Japan (BoJ) survey showed that households’ inflation expectations had risen, keeping the BoJ pressured. Also, expectations of the BoJ tweaking its Yield Curve Control (YCC) have been the main driver behind the Japanese Yen (JPY) strong week against most G8 FX currencies.

USD/JPY Price Analysis: Technical outlook

USD/JPY Daily chart

As of writing, the USD/JPY is struggling to decisively break the top of the Ichimoku Cloud (Kumo), which could pave the way for consolidation. USD/JPY’s sellers are eyeing the bottom of the Kumo at around 135.80/90, but the 200-day Exponential Moving Average (EMA) at 136.43 is expected to cushion the USD/JPY fall. On the upside, if USD/JPY buyers lift the pair past the top of the Kumo at around 138.50/60, it would exacerbate a challenge of the 139.00 psychological level.

USD/JPY

Overview
Today last price138.5
Today Daily Change0.45
Today Daily Change %0.33
Today daily open138.05
 
Trends
Daily SMA20142.79
Daily SMA50139.99
Daily SMA100136.96
Daily SMA200137.16
 
Levels
Previous Daily High138.96
Previous Daily Low137.92
Previous Weekly High144.91
Previous Weekly Low142.07
Previous Monthly High145.07
Previous Monthly Low138.43
Daily Fibonacci 38.2%139.01
Daily Fibonacci 61.8%139.54
Daily Pivot Point S1137.64
Daily Pivot Point S2136.78
Daily Pivot Point S3135.4
Daily Pivot Point R1139.88
Daily Pivot Point R2141.25
Daily Pivot Point R3142.11

Author

Christian Borjon Valencia

Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.

More from Christian Borjon Valencia
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD rebounds after falling toward 1.1700

EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.

GBP/USD steadies below 1.3400 as traders assess BoE policy outlook

Following Thursday's volatile session, GBP/USD moves sideways below 1.3400 on Friday. Investors reassess the Bank of England's policy oıtlook after the MPC decided to cut the interest rate by 25 bps by a slim margin. Meanwhile, the improving risk mood helps the pair hold its ground.

Gold stays below $4,350, looks to post small weekly gains

Gold struggles to gather recovery momentum and stays below $4,350 in the second half of the day on Friday, as the benchmark 10-year US Treasury bond yield edges higher. Nevertheless, the precious metal remains on track to end the week with modest gains as markets gear up for the holiday season.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid bearish market conditions

Bitcoin (BTC) is edging higher, trading above $88,000 at the time of writing on Monday. Altcoins, including Ethereum (ETH) and Ripple (XRP), are following in BTC’s footsteps, experiencing relief rebounds following a volatile week.

How much can one month of soft inflation change the Fed’s mind?

One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures. 

XRP rebounds amid ETF inflows and declining retail demand demand

XRP rebounds as bulls target a short-term breakout above $2.00 on Friday. XRP ETFs record the highest inflow since December 8, signaling growing institutional appetite.