#USDJPY @ 133.882 fails to extend the previous day’s recovery moves, the first in three, after firmer Japan inflation data. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for FREE REGISTER to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level1)]

• USD/JPY fails to extend the previous day’s recovery moves, the first in three, after firmer Japan inflation data.
• Tokyo Consumer Price Index rose to 3.5% YoY in April, crosses market forecasts and prior.
• Risk-on mood, upbeat yields joined US Dollar rebound to previously favor Yen pair buyers.
• BoJ is expected to keep monetary policy unchanged, new Governor Ueda’s speech, economic forecasts will be the key.

The pair currently trades last at 133.882.

The previous day high was 133.94 while the previous day low was 133.01. The daily 38.2% Fib levels comes at 133.37, expected to provide support. Similarly, the daily 61.8% fib level is at 133.59, expected to provide support.

USD/JPY drops to 133.80 during early Friday morning in Asia as strong Japan inflation data renews hawkish bets on the Bank of Japan’s (BoJ) future moves ahead of today’s monetary policy meeting.

That said, Tokyo Consumer Price Index (CPI) came in 3.5% YoY for April versus 2.6% expected and 3.3% prior whereas Tokyo CPI ex Food, Energy, known as the Core CPI, also increased to 3.8% YoY during the said month compared to 2.9% market forecasts and 3.4% previous readings. Further details of the publication revealed that Japan’s Unemployment Rate rose to 2.8% in March versus 2.5% expected and 2.6% prior whereas the Jobs/Applicants Ratio eased to 1.32 from 1.34.

With the upbeat inflation figures, the odds of witnessing a hawkish change in the Bank of Japan’s (BoJ) future communication become brighter, which in turn weighs on the USD/JPY of late, even if the BoJ is expected to keep the current monetary policy unchanged.

As a result, Friday’s BoJ becomes crucial for the USD/JPY pair traders as the aforementioned catalysts may allow the BoJ Governor Ueda to have entertainment during the first day of the BoJ ruling. That said, Ueda’s speech and economic forecasts for the Asian major will be crucial to watch for clear directions.

Also read: Bank of Japan Preview: New governor but old policy

It’s worth noting, however, that the risk-on mood, mainly led by the strong US tech earnings and mixed US data, allowed Wall Street to have the biggest daily gain in a week. The same also propelled US Treasury bond yields and favored the USD/JPY to snap a two-day downtrend on Thursday.

The first readings of the US Gross Domestic Product (GDP) for the first quarter (Q1) of 2023, also known as Advance readings, marked mixed outcomes. That said, the headline US GDP Annualized eased to 1.1% from 2.0% expected and 2.6% prior but the GDP Price Index inched higher to 4.0% on an annualized basis from 3.9% prior and 3.8% market consensus. Further, the Personal Consumption Expenditure (PCE) Prices for Q1 rallied to 4.2% from 3.7% in previous readouts whereas the Core PCE figures also crossed 4.8% market forecasts and 4.4% prior with 4.9% mark for the said period. It should be noted that a slump in the weekly Initial Jobless Claims also allowed the US Dollar to remain firmer.

Having witnessed the initial market reaction to the Tokyo inflation numbers, USD/JPY pair traders are likely to wait for the BoJ decision even if the Japanese central bank isn’t expected to alter the current monetary policy and has already ruled out hawkish moves in the near future. The reason could be linked to Kazuo Ueda’s first meeting as a Governor and the presence of the economic forecasts for release. On Thursday, Former BoJ Deputy Governor Masazumi Wakatabe mentioned that he will be surprised if the BoJ changes Yield Curve Control (YCC) on Friday. Previously, Bank of Japan´s (BoJ) Governor Kazuo Ueda spoke in the Japanese Parliament, known as Diet, while saying that the risk of a rise in inflation is driven by lost of market trust in Japan’s finances low for now. The policymaker also tried to tame talks of inflation woes and indirectly suggests no change in this week’s monetary policy meeting, not even surrounding the YCC.

Following that, the US Core PCE Price Index for March, the Fed’s preferred inflation gauge, expected to ease to 4.5% YoY versus 4.6% prior, will be crucial to watch for the Yen pair traders, especially due to the next week’s Federal Open Market Committee (FOMC) monetary policy meeting.

Also read: US Core PCE Preview: Why this is a lose-lose situation for the US Dollar

An impending bear cross on the MACD joins one-week-old descending resistance line, currently around 134.15, to restrict short-term USD/JPY upside.

Technical Levels: Supports and Resistances

USDJPY currently trading at 133.88 at the time of writing. Pair opened at 133.67 and is trading with a change of 0.16% % .

The pair is trading above its 20 Daily moving average @ 133.25, above its 50 Daily moving average @ 133.79 , above its 100 Daily moving average @ 132.92 and below its 200 Daily moving average @ 137.01

The previous day high was 133.94 while the previous day low was 133.01. The daily 38.2% Fib levels comes at 133.37, expected to provide support. Similarly, the daily 61.8% fib level is at 133.59, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 133.14, 132.62, 132.22
• Pivot resistance is noted at 134.07, 134.47, 135.0

[/s2If]
Nehcap Expert Advisor
The NEHCAP MT4 EA is high quality professional trading system geared to generate returns without using GRID or martingales. Each trade has strict risk per trade parameter. The pairs under management include EURUSD, GBPUSD, AUDCAD, AUDNZD,GBPAUD, EURAUD, EURCAD, CHFJPY and many more.
The system is trading live: LIVE ACCOUNT TRACKING
You can run it free. Apply for a free trial and track our account. Buy the system or use profit share mechanism to generate returns on your MT4.
Join Our Telegram Group