USD/JPY Subdued as US CPI Inflation Looms
USOIL Analysis
Mr Ueda took over as the new Governor of the Bank of Japan over the weekend, not showing any intention to rock the boat and make any immediate changes to the ultra-loose monetary policy setting adopted by his predecessor. In line with previous remarks, the new governor said that "it's appropriate to maintain yield curve control for now", according to Reuters. [1]
The US Fed meanwhile adopted a more conservative stance after the collapse of Silicon Valley Bank, expecting a terminal rate of 5.1%, which suggests just one more 25 basis points rate hike before pausing [2]. Friday's employment report however, was quite strong and unemployment ticked down to 3.5%.
The labor market is still tight and inflation sticky, which may put pressure on the central bank to stay on an aggressive policy path. As, such today's CPI Inflation figures will be closely watched, since they can affect the thinking of policymakers and the trajectory of USD/JPY. Furthermore, the accounts of that last policy decision are released later in the day.
After a strong start to the week, USD/JPY makes another effort to surpass 50% of the March high/low drop. This can open the door to the 76.4% (135.95), but a catalyst will likely be required for such moves and the greenback does not inspire much confidence at this stage for challenging 137.91.
On the other hand, USDJPY is subdued today awaiting the CPI report and had failed at the 50% Fibonacci earlier in the month, while the Relative Strength Index is close to oversold levels. As such, there is risk for a return below the EMA200, which would bring the broader region around 130.00 in the spotlight. However, sustained weakness below it, would be hard to justify based on the current monetary policy environment.
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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