Weak CPI as the USD/JPY Rallies Onward - Forex News by FX Leaders
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Weak CPI as the USD/JPY Rallies Onward

Posted Friday, May 18, 2018 by
Rowan Crosby • 1 min read

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.

USD/JPY – 240 min Chart.

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About the author

Rowan Crosby // Asia-Pacific Analyst
Rowan Crosby is a professional futures trader from Sydney, Australia. Rowan has extensive experience trading commodities, bonds and equity futures in the Asian, European and US markets. Rowan holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.
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