Weak CPI as the USD/JPY Rallies Onward
Inflation has been the focus for many central banks around the world and in Japan, it has been an issue for many years.
Inflation has been the focus for many central banks around the world and in Japan, it has been an issue for many years. Today we saw a CPI miss which is sure to put more pressure on the BOJ.
Headline CPI came in at 0.6% vs 0.7% expected. That means there is little to no chance that the BOJ will be able to tighten their monetary policy any time soon.
As a result, we also heard that the JGB purchase amounts will also be left the same.
The Technical Picture
Last night the USD/JPY gained some ground. There was some upward pressure on the USD as we saw bond yields in the US continue to climb higher and are now firmly above 3%.
Despite the weak inflation, the USD/JPY has kept on creeping higher. As it stands we are a touch below 111.00 with our next major upside target being the 111.50 resistance level.
The USD/JPY has been outperforming the DXY recently and is already slightly in breakout mode. So if the DXY is able to crack resistance then I would expect the Yen to continue to outperform to the upside.
Similarly, if we do fall away a touch then I think there might just be the buying interest there to hold it up. Making me pretty bullish overall on the USD/JPY.
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