Forex Chart Of The Day: USDJPY Plummets as US Inflation Eases, Fed Pause Anticipated

The price of USDJPY has fallen after US CPI showed further declines in inflation. Will the price continue lower?

Watch the video to learn more…

USDJPY Analysis 

The USDJPY currency pair experienced a notable decline following the release of the latest US Consumer Price Index (CPI) data. According to the report, US inflation on a year-over-year basis (y/y) fell from 5% to 4.9%. This decline, though modest, has significant implications for the financial markets, especially for traders who are keen on deciphering the future actions of the Federal Reserve. 

A decrease in inflation levels can be perceived as a signal of economic stability, providing some relief to consumers and businesses grappling with high living costs and operational expenses. However, it also has critical ramifications for the forex market. The depreciation of the US dollar against the Japanese yen (USDJPY) can be attributed to the reduction in inflation, as it tempers expectations for aggressive monetary policy tightening by the Federal Reserve.

In light of this data, market participants are now speculating that the Fed might pause its rate hike cycle in the upcoming meeting. A temporary halt in rate increases would provide the central bank with more time to gauge the economic outlook and assess the overall effectiveness of its current monetary policy stance. Consequently, traders are adjusting their positions in anticipation of a potential shift in the Fed’s approach, which has manifested in the form of downward pressure on the USDJPY.

USDJPY

The price on the chart has traded through multiple technical levels and some observations included:

• USDJPY price has traded lower after the release of the US CPI numbers. 
• If the price traders lower, traders could target the previous support of 133.50.
• A break of this level would see the price move down to 127.50.

Have you watched our interview with AUDUSD analysis? You can see it here. 

Enjoy low spreads and quick trade executions with a live account. Our highly committed customer support team will assist you with your quick account setup for any future concerns. Start trading with Blueberry Markets today.

About The Author

Jonathan Kibbler

Jon Kibbler, our Senior Market Analyst, boasts over a decade of trading experience. He specializes in dissecting the intricacies of financial markets and sharing his expertise with precision. Jon’s insights have been featured at renowned events and platforms like Coindex, Forex Analytix, and Forex.com.

See author's posts