USDJPY Bounces at 130.00 Support level, Still Appears Vulnerable to Further Downside Move.
After conflicting inflation statistics from Japan, the USDJPY fell to a new 6-week low. In the Asian session before finding some support near the 130.000 psychological barrier.
Japan Inflation Eases from Four-Decade High but So-Called Core-Core CPI (excluding fresh food and energy) Continued to Accelerate.
The YoY inflation rate decreased to 3.3% in February 2023, down from a 41-year high of 4.3% in January, while the MoM print showed a 0.6% reduction in February, the first drop since October 2021. The crucial point, however, was that the core-core CPI (excluding fresh food and energy) increased to 3.5% in February (from 3.2% in January). The persistent rise in the CPI (excluding fresh food and energy) has revived hopes of a BoJ shift when new Governor Ueda takes over on April 9.
In my opinion, there is no quick turnaround in But, future changes to the yield control strategy by incoming Governor Ueda cannot be ruled out. According to sources, Prime Minister Kishida’s government considers tight monetary easing as troublesome, with the Bank of Japan reportedly watching the impact of December’s broadening of the control range until current Governor Kuroda’s term ends.
After the FOMC meeting, the US Dollar has struggled, further impacting on USDJPY pricing, with the DXY touching a low around the 102.000 line yesterday. We do have US Durable Goods data later in the day, and a favorable reading might bring some relief to the greenback. Yet, whether such a step will be sustainable remains to be seen.
USDJPY Technical Analysis
Technically, the USDJPY has been steadily falling since the FOMC meeting on Wednesday. The 50-day MA gave resistance around the 132.60 mark, which is the most recent lower swing high.
We have printed a new bottom, approaching the crucial 130.000 level, with a possible retracement.
Nonetheless, it looks like the path of least resistance is additional decline, with any rallies giving prospective shorts with a greater risk-to-reward chance. Below the 132.60 mark, the USDJPY remains negative.
