USDJPY broke above the 152.00 resistance level
Updated
The US dollar surged on Wednesday due to higher-than-expected US inflation numbers. This led to USDJPY reaching new highs for 2024 and its strongest level since 1990. The March Consumer Price Index report showed persistent inflation in the North American economy, reducing expectations for a June FOMC rate cut. Headline CPI increased by 3.5% YoY, surpassing forecasts and accelerating from February's 3.2%. The core gauge, which excludes volatile energy and food costs, also exceeded expectations at 3.8%, indicating a potential increase in price pressures.
Wall Street reacted swiftly, pushing U.S. Treasury yields upwards across the board on bets that the Federal Reserve may be compelled to maintain a restrictive position for an extended period. Against this backdrop, the U.S. 2-year yield jumped more than 20 basis points, coming within striking distance from recapturing the 5.0% psychological mark.
Traders also adjusted their view on the FOMC’s trajectory, pushing back on the timing and magnitude of future reductions in borrowing costs. That said, futures contracts now price in less than 40 basis points of easing for the year, with the first potential cut likely occurring in September. The table below shows current meeting probabilities.
Fed Chair Powell recently downplayed inflation concerns at the Stanford Business, Government, and Society Forum. However, recent high CPI figures may prompt a reassessment of policy outlook and lead to more hawkish rhetoric, which could benefit the U.S. dollar. While the dollar may consolidate in the short term, it's uncertain if it can continue to appreciate against the yen as Japanese authorities may intervene to support their currency.
USDJPY TECHNICAL ANALYSIS
USDJPY broke through resistance at 152.00, reaching its highest level since June 1990. Without intervention, speculators may attack the upper boundary of a medium-term ascending channel near 155.70. If prices fall below 152.00, support is expected at 150.90 and failure to defend this area could lead to a retracement towards the 50-day moving average at 150.00, with channel support near 149.25 being closely watched.
Wall Street reacted swiftly, pushing U.S. Treasury yields upwards across the board on bets that the Federal Reserve may be compelled to maintain a restrictive position for an extended period. Against this backdrop, the U.S. 2-year yield jumped more than 20 basis points, coming within striking distance from recapturing the 5.0% psychological mark.
Traders also adjusted their view on the FOMC’s trajectory, pushing back on the timing and magnitude of future reductions in borrowing costs. That said, futures contracts now price in less than 40 basis points of easing for the year, with the first potential cut likely occurring in September. The table below shows current meeting probabilities.
Fed Chair Powell recently downplayed inflation concerns at the Stanford Business, Government, and Society Forum. However, recent high CPI figures may prompt a reassessment of policy outlook and lead to more hawkish rhetoric, which could benefit the U.S. dollar. While the dollar may consolidate in the short term, it's uncertain if it can continue to appreciate against the yen as Japanese authorities may intervene to support their currency.
USDJPY TECHNICAL ANALYSISUSDJPY broke through resistance at 152.00, reaching its highest level since June 1990. Without intervention, speculators may attack the upper boundary of a medium-term ascending channel near 155.70. If prices fall below 152.00, support is expected at 150.90 and failure to defend this area could lead to a retracement towards the 50-day moving average at 150.00, with channel support near 149.25 being closely watched.
Trade closed: target reached
Price is acting exactly as the strategy analyzedNote
USDJPY dropped to 154.15 after statements from Japanese officialsJapanese Deputy Minister of Finance in charge of international affairs Kanda continued to intervene in currency with words, affirming the G7 statement reaffirming foreign exchange commitments based on Japan's stance
BoJ official Noguchi affirmed the need to maintain ultra-loose monetary policy
USDJPY decreased slightly to 154.15.
Note
One thing to note is that over the past several months, despite global instability, the USDJPY pair has still increased, proving that the USD is still more favored. However, the RSI indicator is in the overbought zone and shows signs of turning down. If the correction takes place, it may not be too negative and the main trend will still be uptrend.Note
USDJPY rose 0.4% to a session high of 155.37 on Wednesday, marking the first time since June 1990 that the pair exceeded 155. USDJPY traded at 155.21 as of 5:27 a.m. this morning.Note
USD/JPY decreased slightly from the peak to 155.97 before BOJ Governor Ueda's speech.The BOJ's policy decision hasn't yielded much, and based on recent inflation data, it's hard to see an overly hawkish approach from Ueda. But that could be taken to mean they are comfortable with allowing the yen to fall further.
Ueda prepares to start the press conference. And usually, it will last about an hour or so. USD/JPY rose 0.2% to 155.97 on the day but was down from around 156.20 previously.
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