USD/JPY Rate: Investors Await US CPI Report and BoJ Meeting
USD/JPY rate continues its non-directional movement below the 140.00 resistance level as the focus shifts to the upcoming US Consumer Price Index (CPI) report and the Bank of Japan’s (BoJ) monetary policy meeting. Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group anticipate that the currency pair will trade within a relatively narrow range of 138.50-141.00 in the short-term horizon. This range-bound behavior suggests a consolidation phase as traders await key market catalysts.
USD/JPY Faces Uncertainty Ahead of US CPI Release
As USD/JPY rate remains stable below the critical 140.00 level. Meanwhile, investors exercise caution in anticipation of the release of the US CPI report. The outcome of the CPI data is heading toward bringing a significant impact on the Federal Open Market Committee (FOMC) meeting. Besides, subsequent monetary policy decisions will drastically affect the pair. The market sentiment and risk appetite influenced the USD/JPY pair’s movement. Therefore, traders gauge the potential implications of inflationary pressures on the US dollar and the broader financial markets.
Bank of Japan’s Monetary Policy Decision Awaits USD/JPY Traders
The upcoming monetary policy decision by the Bank of Japan (BoJ) adds another layer of uncertainty to the USD/JPY pair. BoJ Governor Kazuo Ueda is widely anticipated to keep the interest rate policy unchanged, reiterating the need for further monetary stimulus to sustain inflation above the 2% target. The BoJ’s decision will play a crucial role in shaping market expectations and influencing the direction of the USD/JPY rate.
Technical Outlook for USD/JPY: Range-bound Trading Prevails
While short-term price fluctuations persist, the medium-term outlook indicates an upward trend, supported by the positioning of the daily Exponential Moving Averages (EMAs) below the spot price. To validate the bullish sentiment, the USD/JPY pair would need to break above the upper boundary of the range, potentially testing the year-to-date (YTD) high of 140.92. If the upper range is breached, the pair’s next targets lie at 141.00 and the November 22 high of 142.24. Conversely, a drop below the 20-day EMA at 138.79 may expose the lower boundary of the range at 138.40, followed by the psychological support level at 138.00.
US Treasury Yields and Market Sentiment Impact USD/JPY
The USD/JPY pair remains neutrally biased within the 138.40-140.45 range. While short-term fluctuations persist, the medium-term outlook indicates an upward trend. Breaking above the range’s upper boundary could lead to further gains, with key resistance levels in sight. Conversely, a drop below the range’s lower boundary may expose the pair to downside pressure. US equities demonstrate a positive market sentiment despite rising US bond yields. The USD/JPY rate finds support from increased US Treasury yields, aiding the recovery of the greenback. The economic landscape and upcoming data releases play a crucial role in shaping market dynamics and influencing the pair’s movement.
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