USD/JPY: US PCE inflation and personal consumption [Video]

• US Core PCE index takes center stage; USD/JPY eyes upside recovery.

• UK CPI on Wednesday expected to stay within target range; GBPUSD gains.

• Australia's CPI projected to hold steady; AUD/USD edges upward.

 

US PCE inflation and personal consumption – USD/JPY

This week, the spotlight will be on the US core PCE inflation index and personal consumption data. According to the Cleveland Fed's Nowcast model, the headline PCE price index likely remained steady at 2.5% y/y in February, while the core PCE price index may have slightly increased to 2.7% from 2.6% y/y. Additionally, personal consumption in January recorded a 0.2% m/m decline, but analysts anticipate a recovery of 0.5% m/m in February.

USD/JPY is experiencing an upward wave following a pullback from its five-month low of 146.50, testing the short-term descending trend line near the psychologically significant 150.00 level. A break above the immediate resistance at 150.10 could push the pair toward the 151.15 barrier and the bearish crossover of the 50- and 200-day simple moving averages (SMAs) at 151.60. Conversely, a downside move could bring the price down to the 148.15 and 147.15 levels.

Additionally, the yen's movement this week could be influenced by Friday’s release of the Bank of Japan’s March meeting Summary of Opinions.

UK CPI Data – GBP/USD

The UK CPI report, due on Wednesday, is expected to show a slight decrease in inflation from 3.0% to 2.9% y/y in February, keeping it within the Bank of England’s target range of 1.0%-3.0%. Investors are likely to analyze the data closely to determine if core and services CPI continue their rapid growth trajectory.

GBPUSD is trending higher, finding strong support around the mid-level of the Bollinger band and the 1.2885 support area. Further upward momentum could take the pair to the four-month high of 1.3015, followed by the 1.3045 and 1.3100 resistance levels, which align with the upper Bollinger band. On the downside, a break lower could bring the pair to the 1.2815–1.2840 region, with the 200-day SMA at 1.2800 acting as a key support level.

Australian CPI Data – AUD/USD

Australia’s inflation figure is forecast to remain unchanged at 2.5% y/y in February for the third consecutive month. Meanwhile, escalating trade tensions are raising concerns about potential disruptions in China, Australia's largest export market, posing risks to the domestic economy. A stronger-than-expected CPI outcome might boost the Australian dollar, as it could prompt investors to reassess the likelihood of rate cuts by the Reserve Bank of Australia (RBA).

AUD/USD is trending upward, nearing the short-term SMAs around the 0.6300 psychological mark and maintaining its upward momentum since mid-January. Increased bullish pressure could pave the way for a retest of the 0.6390 resistance level and the two-and-a-half-month high of 0.6407. It’s worth noting that only a breakout above the 200-day SMA at 0.6510 would signal a shift to a broader bullish outlook. On the other hand, a drop below the near-term uptrend line could shift the bias to neutral, targeting 0.6180 and 0.6130.