- Traders sought reassurance after Trump’s tariff promises raised fears of trade wars.
- The dollar strengthened on the prospect of stronger economic performance.
- Japan’s producer services price index rose by 2.9% in October.
USD/JPI price analysis shows yen strengthening amid safe-haven demand and rising expectations of a rate cut by the Bank of Japan. Meanwhile, the dollar paused its gains as market participants awaited key reports including inflation, jobless claims and GDP.
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The yen strengthened on Tuesday and Wednesday as traders sought reassurance after Trump’s tariff promises sparked fears of trade wars. The US president-elect has promised to impose a 25 percent tariff on goods from Mexico, Canada and China. The news reduced risk appetite and boosted safe-haven currencies like the yen. The tariffs will significantly hurt major economies like China and Canada, affecting the global economy.
On the other hand, the dollar strengthened on the prospect of stronger economic performance. Tariffs imposed on imported goods will increase demand for domestic goods and boost the economy. By Wednesday, however, the rally was on pause as the market’s focus shifted to upcoming US economic data.
Elsewhere, data showed Japan’s producer services price index rose 2.9% in October after rising 2.8% in the previous month. Higher inflation increases the likelihood that the Bank of Japan will raise rates in December, boosting the yen.
Meanwhile, the US will release reports on GDP, jobless claims and inflation. Economists expect the economy to grow by 2.8%, holding on to the previous reading. Meanwhile, the core PCE price index could rise 0.3% as in the previous month. Upbeat economic data will reduce the likelihood of a December rate cut, boosting the dollar. On the other hand, worse data will reinforce expectations of a rate cut.
USD/JPI Key Events Today
- USA surpasses GDP q/q
- US unemployment claims
- Core US price index PCE m/m
USD/JPI price technical analysis: Bears break below 151.74
From the technical side, USD/JPY the price is on the verge of breaking below the support level of 151.74. The price fell sharply after breaking away from the key level of 154.51. It is trading well below the 30-SMA, indicating a sharp decline. Meanwhile, the RSI fell into the oversold region, showing solid bearish momentum.
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If the price closes well below the 151.74 level, the decline will continue to the next support level. On the other hand, if USD/JPI fails to break support, it may pull back to retest the 30-SMA before trying again.
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