USDJPY On Watch Into US Data
USD Higher on Thursday
USDJPY continues to hold in a ranging pattern just below recent YTD highs. News of the US/Iran ceasefire yesterday saw USD peeling off as energy prices fell and safe-haven demand for USD weakened. Risk assets pushed higher across the board while JPY also gained as money flowed out of USD. However, today the ceasefire is looking shaky on the back of warnings from Iran that Israel has breached certain ceasefire conditions already. Additionally, with the Strait of Hormuz not yet reopened as promised under the ceasefire, traders are wary of the deal collapsing. If tensions continue to mount and the deal looks likely to fail USD could push firmly higher again as oil prices spike higher. As such, incoming news flow will be key for near-term price direction.
Hawkish Fed Minutes
USD is also being helped today by a hawkish set of FOMC minutes yesterday. The minutes showed that policymakers were concerned over the path of inflation which they feared would take longer to bring back down to target than initially thought. Members were also seen acknowledging risks that rates might need to rise if inflation does continue higher.
US Data Due
Looking ahead, focus will be on today’s US core PCE and final FDP data. Both are expected unchanged at 0.7% and 3.8% respectively. Any upside surprise in either reading should reinforce the hawkish Fed narrative and keep the Dollar bid into tomorrow’s headline CPI release where further bullish USD risks are seen in line with hawkish inflation expectations.
Technical Views
USDJPY
For now, USDJPY remains in the top of the bull channel, underpinned by the 157.85 level support. While this support holds, focus is on a fresh push higher with the 161.95 level and bull channel highs the next bull target. If we break lower, 154.65 and the bull channel lows will be the next support to watch.
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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.