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The USD/JPY falls below 131.500: Sell Now?

Posted Thursday, January 12, 2023 by
Arslan Butt • 2 min read

USD/JPY has dropped significantly ahead of the Tokyo open, falling 0.4%. The pair dropped from a high of 132.48 to a low of 131.76 before stabilizing. The Japanese newspaper Yomiuri published an article implying that the Bank of Japan (BoJ) will make another hawkish move during its monetary policy meeting next week.

The announcement indicated that the Japanese central bank is prepared to discuss the consequences of enormous monetary stimulus at next week’s monetary policy meeting. “BoJ reviews rates due to market-driven interest rates,” Yomiuri adds to Reuters.

US Inflation Figures in Highlights

This comes ahead of today’s US December inflation report, which is projected to show an annualized 6.5% increase in US prices. This is lower than the 7.1% rate recorded in November. Investors are keeping a tight eye on the Consumer Price Index since it is expected that if it continues to slow, so will the Federal Reserve’s rate hike schedule.

TD Securities analysts explained in this regard that they expect the core Consumer Price Index to have moved higher on a monthly basis in December, “ending off the year on a comparatively stronger footing,” they said. “In fact, we anticipate a 0.3% MoM increase as service inflation gains traction.”

Regarding the headline, we predict Consumer Price Index inflation to be lower on an unrounded basis in December but rounded up to a flat MoM since energy prices provided significant assistance once again. According to our MoM predictions, headline and core CPI inflation likely slowed in December.

USD/JPY Technical Outlook

The USD/JPY pair opened badly today, ending yesterday’s predicted bullish scenario and restarting the primary bearish trend, paving the way for negative goals that begin at 130.90 and extend to 130.00. As a result, we anticipate further declines today, conditioned by the price stability of 132.10.

Today’s trading range is likely between 130.60 support and 132.40 resistance.

Today’s projected trend is bearish.

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