- Investors were cautious ahead of the US wholesale inflation report.
- USD/JPI fell after US retail sales report missed forecasts.
- Japanese authorities have warned of possible actions to stop the excessive fall of the yen.
Friday’s USD/JPI price analysis reveals a bullish stance, led by a rebound in the dollar, setting the stage for a fifth straight week of gains. Still, investors tread carefully in anticipation of the US wholesale inflation report.
–Are you interested in learning more about forex options trading? Check out our detailed guide-
On Thursday, USD/JPI fell after the US retail sales report missed forecasts. A significant drop in sales in the US in January pointed to a slowing economy. This led to a momentary pause in falling bets on a Fed rate cut. Consequently, the dollar fell, allowing the yen to fall below the $150 level.
However, the pair rallied on Friday as investors awaited more data for insight into the timing of the Fed’s rate cut. Namely, Raphael Bostic from the Fed said on Thursday that he is not ready to support a reduction in interest rates. Still, he acknowledged that the Fed has made a lot of progress in lowering inflation.
Meanwhile, investors are cautious as the yen hovers around the $150 level, which could prompt intervention. The yen’s recent weakness is the result of a stronger dollar. Moreover, investors are adjusting expectations about how aggressively the BoJ will raise rates. Recent data has revealed that the Japanese economy has slipped into recession at the end of 2023. Accordingly, the BoJ may change its policy more slowly than markets expect.
Japanese authorities have warned of possible actions to stop the excessive fall of the yen. However, as their verbal warning loses effectiveness, they may have to take action in the market to strengthen the yen.
USD/JPI Key Events Today
- US Producer Price Index Report
- Preliminary US UoM Consumer Sentiment Report
USD/JPI Technical Price Analysis: Bears are making weak efforts to break channel support
On the technical side, USD/JPI made a weak attempt to break below its bullish support channel. At the same time, it broke the 30-SMA support line. However, the RSI remained in bullish territory above 50, supporting bullish momentum.
-If you are interested in learning more about forex broker scalping, read our guidelines to get started-
The price is trapped near the critical psychological level of 150.00. Therefore, the bears need to break away from this level and start making lower lows for the trend to reverse. Furthermore, the price must start respecting the 30-SMA as resistance. However, if 150.00 remains firm as support, the price will soon rise to retest the 151.00 level.
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.
