USDJPY | After the CPI : It goes up!

11. Jan.

The analysis of the USD/JPY (US Dollar/Japanese Yen) exchange rate is based on several key aspects:

US Inflation and CPI: The increase in US inflation in December (3.4% against the expected 3.2%) signals a strong economy and reduces the likelihood of interest rate cuts by the Federal Reserve, favoring the US dollar.
US Unemployment Insurance Claims: Lower-than-expected claims (202K against 210K expected) indicate a strong US labor market, supporting the dollar.
Market Expectations and Interest Rates: Expectations for a rate cut in March have decreased due to rising inflation. Higher interest rates tend to strengthen a currency, in this case, the US dollar.
Japanese Economic Indicators: Upcoming data on Japan's trade balance and current account will impact the JPY. Weak data could further weaken the yen.
Technical Analysis of USD/JPY: Technically, USD/JPY has shown an uptrend, reaching a short-term high of 146.41. The 200-hour Simple Moving Average (SMA) and the congestion area between the 50-day and 200-day SMAs are key technical indicators to monitor. Breaking these thresholds could indicate further upward movements.
In conclusion, recent US economic data and monetary policy expectations favor the strengthening of the dollar against the yen. However, future economic data from Japan and the US, including PPI data, will be crucial in determining USD/JPY's future direction. After the CPI, the trend seems clearly outlined towards an upward move, targeting the supply zone at 147.15. Moreover, the price is breaking a supply zone that could serve as support for an imminent bullish rebound. Happy trading to all from Nicola.