USD/JPY Eyes Multi-Decade Highs Ahead of US Inflation Update
USD/JPY Analysis
Fed Chair Powell firmed up his rhetoric on Thursday, saying that officials are "not confident" that they have attained a sufficiently restrictive stance to bring inflation back to the 2% target. This comes after a more dovish appearance at the start of the month, following the second straight hold by the central bank, which had weighed on the greenback.
This helped the resurgence in USD/JPY, as the monetary policy differential remains unfavorable for now. The Bank of Japan increased its YCC flexibility further, but maintained its dovish stance and showed no immediate intention to change its uber-loose stance. The pair now eyes the July 1990 highs (152.20), which would bring 155.76 in the spotlight, although the latter looks distant at this point.
On the other hand, the RSI points to overbought conditions and the pair remains on intervention watch, which can douse the bullish momentum. Pressure back towards the EMA200 (149.70) would not be surprising, but further losses below it would need a strong catalyst and the downside appears well protected.
Markets now turn to Tuesday's US CPI inflation for the next leg of the move. Although substantial progress has been made, the core was still above 4% y/y in September, while the headline showed persistence at 3.7% y/y after a notable acceleration.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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