Usdjpy Retreats Post Us Cpi

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Usdjpy Retreats Post Us Cpi

Usd/Jpy Retreats Post Us Cpi - Rabobank

According to Rabobank analysts, the USD/JPY pair has dropped to the same levels before the release of the US CPI. The US CPI was softer than the forecasts, which increased the prospect of a rate cut. As a result, the JPY gained strength against the greenback.

Another thing which is going well for the USD/JPY is the fact that market players are now expecting the BoJ to deliver a hawkish surprise.

Usd/Jpy Downside Will Be Limited

Rabobank analysts added that the upside seen in the JPY will be short-lived. This means the USD/JPY will likely turn bullish again once the market players digest the latest set of economic data.

Similarly, the FOMC meeting has also revealed a new dot plot in which there is only 1 rate cut from the Fed in 2024. So, that's one factor which supports the USD to some degree.

So, while there will be now fewer rate cuts this year, the USD/JPY has returned to the same trading levels before the release of the US CPI. While the JPY has the upper hand against the USD, it was the worst currency among its G10 peers on a D1 timeframe.

Although the markets expect a surprise from the BoJ, its scope will be limited, which is why the JPY upside will remain limited.

The biggest problem for the JPY right now is that the market's outlook remains bearish. For the policy makers, this is a problem as it will further devalue the currency and make things more difficult for the government and the BoJ.

So, while the JPY has the upper hand against the greenback, it is only short-term and can't be viewed as a long-term trend.

The USD/JPY is currently trading above 157.40, which means the nearest resistance is at 157.80 and then 158.00. On the way down, the nearest support is at 157.00, 156.80, and then the 156.50 level.

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