USD/JPY Technical Analysis
Higher as Traders Ignore Japan's Core Inflation Surge
Japan's core consumer prices jumped 4.0% year on year in December, more than double the central bank's 2% objective and setting a new 41-year high.
Despite concerns that the Bank of Japan (BOJ) may ultimately abandon its ultra-easy policies, the dollar/yen is rising. The Forex pair is also supported by high US Treasury rates.
The USD/JPY is trading at 129.088, up 0.662 or +0.52% at 06:17 GMT. The Invesco CurrencyShares Japanese Yen Trust ETF (FXY) is trading at $72.65, up $0.23 or +0.32% on Thursday.
The USD/JPY rose earlier this week on the Bank of Japan's decision to maintain its ultra-easy monetary policy. However, it also fell as traders continued to gamble on a shift in Bank of Japan policy.
Analysts are divided on whether the BOJ would hike rates this year, owing to concern over whether salaries will rise sufficiently to offset the impact of growing living costs on consumption while keeping inflation at or around 2%.
Japan's core consumer prices surged 4.0% year on year in December, more than double the central bank's 2% objective, setting a new 41-year high and fueling market hopes that the central bank will gradually phase out ultra-low interest rates.
Technical Analysis of the Daily Swing Chart
According to the daily swing chart, the major trend is down. However, momentum is increasing. A move through 127.227 will indicate that the downturn has resumed. A break of 134.775 shifts the primary trend upward.
The minor trend is positive. On Wednesday, it began to rise. The motion changed momentum upward.
The nearest support is the major bottom on May 24, 2022, which is at 126.362. The nearest resistance levels are 103.050 and 131.001.
Technical Forecast for the Daily Swing Chart
The reaction of traders to a minor pivot at 129.403 will most likely influence the direction of the USD/JPY on Friday.
Bullish Scenario
A persistent advance over 129.403 suggests the presence of buyers. This might lead to a surge towards pivots at 130.050 and 131.001. Passing through this level might set up a test of the minor tops at 131.578 and 131.872.
Bearish Scenario
A persistent move below 129.402 indicates the presence of sellers. This might result in a retest of the primary bottom at 127.227, followed by a retest of the long-term support at 126.362.