- The yen rose nearly 3% on Thursday after a weaker US inflation report.
- There is speculation in the market that Japan intervened on Thursday.
- The consumer price index in the US fell by 0.1% in June.
The outlook for USD/JPI is tipping slightly bullish as the yen pulls back after a jump in the previous session. Still, the overall trend remains bearish after the dollar weakened on lower-than-expected inflation.
–Are you interested in learning more about Bitcoin price prediction? Check out our detailed guide-
The yen rose nearly 3% on Thursday after a weaker US inflation report. However, there was speculation in the market that Japan had also intervened to strengthen the currency. Some news outlets such as Asahi reported that officials had intervened in the market.
On Friday, top currency diplomat Masato Kanda did not comment on the possible intervention. However, he reminded traders that Japan will take the necessary measures in the foreign exchange market.
Meanwhile, the dollar fell sharply after inflation fell for the first time in 4 years. This was a big boost to Fed rate cut expectations. Moreover, it came after Powell said policymakers needed more evidence that inflation was falling.
Namely, the consumer price index fell by 0.1% in June. Meanwhile, the annual figure rose 3.0%, down from a 3.3% increase the previous month. Price pressures eased as gasoline became cheaper. This report should give Fed officials more confidence that inflation is on a downward path and will eventually reach the 2% target.
As a result, market participants increased the probability of a Fed rate cut in September from 73% to 93%. Traders are all but certain that the US central bank will start cutting borrowing costs in September. As a result, the dollar lost its appeal, allowing the yen to recover.
USD/JPI Key Events Today
- USA core PPI m/m
- US PPI m/m
- Prelim UoM consumer sentiment
USD/JPI Technical Outlook: Sentiment is changing after a sharp bounce in bearish momentum
On the technical side, the price of USD/JPI is jumping higher after reaching the key support level of 158.01. The price recently made a sharp decline which led to a change in sentiment to the bears. The pair broke below the 30-SMA and the RSI fell into the oversold region, supporting the bearish bias.
–Are you interested in learning more about crypto robots? Check out our detailed guide-
However, after such a steep move, the price pulls back before continuing lower. A pullback could retest the 158.01 level and the 30-SMA. If the bears maintain control, the price will cross 158.01 to revisit the 156.01 support.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
