- The USD/JPY is trading into the high side above the 150.00 handle as markets dare the BoJ to intervene.
- Japanese Tokyo CPI inflation beat the street, coming in at 2.7% vs 2.5% expected.
- Friday to close out the week with US PCE Index figures.
The USD/JPY is trading into 150.40 with markets largely unfazed by the Tokyo Consumer Price Index (CPI) inflation data beat.
Japan inflation: National CPI improves to 3.3% YoY in October vs. 2.8% prior
Japan's leading Tokyo CPI inflation indicator saw an uptick in Japanese inflation, with the headline annualized Tokyo CPI inflation for October printing at 3.3%, compared to the previous month's 2.8% print.
The Core Tokyo CPI (headline inflation less volatile food prices) also beat the market forecast, printing at 2.7% for the year into October compared to September's reading of 2.5%.
https://www.fxstreet.com/news/forex-today-dollar-stays-cool-despite-hot-us-economy-202310262041
The USD/JPY continues to trade into a price level that has seen the Bank of Japan (BoJ) take defensive measures in the past, and markets are keeping the Yen pinned to the floorboards as investors dare the BoJ to take action to defend the JPY.
Early Friday's Tokyo CPI print could see the BoJ forced to consider making changes to their monetary policy framework at their next meeting. The BoJ has been paralyzed by a fear that inflation will sink past the Japanese central bank's 2% minimum target, but as inflation measures beat expectations, the BoJ will have no choice but to start deciding how long is too long for price growth in the domestic Japanese economy before they begin to take action to protect consumers.
The trading week will close out with Friday's US Personal Consumption Expenditure (PCE) Price Index, which is expected to tick upwards from 0.1% to 0.3% for the month-on-month figure for September.
USD/JPY Technical Outlook
On Thursday, the USD/JPY currency pair exhibited notable strength by surpassing the significant psychological threshold of 150. This extension of the prevailing upward trajectory underscores the bullish sentiment across various time frames, including the long-term, intermediate, and short-term perspectives.
The absence of discernible reversal signals in the market further supports the prevailing uptrend, instilling confidence in the probability of continued upward momentum. Notably, the next prominent price target resides at the 152.00 level, a level previously achieved in October 2022.
A technical analysis of the daily chart reveals the completion of what appears to be an ascending triangle pattern, followed by a breakthrough above the 150.16 highs recorded on October 3. It is worth noting that the breakout, as observed on Thursday, was not decisively pronounced, as indicated by the formation of a 'Doji' candlestick, reflecting a degree of market indecision. However, the overarching upward trend lends support to the expectation of a subsequent price appreciation.
In light of the technical analysis, the triangle's projected target is positioned approximately at the 152.00 level.
USD/JPY Technical Levels
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