Bullish USDJPY Risks Into US Inflation
Dollar Strengthening Again
USDJPY is pushing higher again today, despite recent incidents of suspected intervention from Japanese authorities. USDJPY saw multi percentage drops on two separate days over the last fortnight, tracking a pattern of intervention last seen at the sae time in 2024. However, no subsequent move lower has materialised and with USD stronger across the board today, risks of a fresh break higher are seen.
US Inflation
Looking ahead today, US inflation will be the main driver. Annualised headline CPI is expected to have jumped again last month to 37% from 3.3% prior. If confirmed, USD should continue higher near-term as traders lift their expectations of a Fed rate hike this year. The market us currently pricing around a 30% chance of a hike by year end. If today’s data comes in above forecasts, this could well see that pricing pushing up to or above the 50% level, taking USD firmly higher. If we do see a strong push higher in USDJPY, this will raise the prospect of further intervention give the BOJ’s recent defence of the 160 level. As such, there is plenty of volatility risk seen near-term. With further USD data due tomorrow and Thursday as well as plenty of Fed speakers due, USD could be on course to end the week firmly higher if we see strong data and hear hawkish commentary from the Fed.
Technical Views
USDJPY
The sell off in USDJPY has stalled for now into a test of the bull channel lows. The subsequent recovery now has price testing the 157.85 level. If we get bac above that level, focus will be on a continuation of the bull channel higher with 161.95 the next target for bulls. If we break lower, 154.5 will be the next support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.