Today’s U.S. inflation report is critical; a higher-than-expected figure could reinforce rate cut expectations, weakening the dollar.
Key Points
- The USD/JPY closed at 161.710 yesterday, gaining 0.24% due to US-Japan interest rate differentials.
- Today, USD/JPY is at 161.556, down 0.10%, with focus on upcoming U.S. inflation data.
- USD/JPY fluctuates around the 200 EMA, indicating consolidation, with key support at 161.385 and resistance at 161.802.
USD/JPY Daily Price Analysis – 11/07/2024
The USD/JPY pair closed yesterday at 161.710, opening at 161.326, marking a modest gain of 0.24%. This slight upward movement can be attributed to ongoing interest rate differentials between the US and Japan. Despite a general placidity in recent weeks, the USD/JPY remains pressured near a 38-year low due to Japan’s ultra-loose monetary policy contrasted with the US’s higher interest rates.
As of today, the USD/JPY is trading at 161.556, down by 0.10% from its opening at 161.620. The main focus for today is the U.S. inflation data scheduled for release at 1230 GMT. Market expectations are for a core inflation rise of 0.2% in June, putting the annual figure at 3.4%. A lower-than-expected inflation figure could bolster confidence in a potential Federal Reserve rate cut in September, which might apply additional downward pressure on the dollar.
Fed Chair Jerome Powell’s recent comments have indicated a cautious approach towards rate adjustments, emphasizing decisions will be made “when and as needed,” likely tempering immediate market reactions. The yen continues to feel the weight of stark interest rate differentials. Additionally, the Bank of Japan’s ongoing discussions about tapering bond purchases could introduce some volatility, though significant policy changes are not expected until their meeting at the end of July.
Key Economic Data and News to Be Released Today
Today’s highlight is undoubtedly the U.S. inflation report. If core inflation meets or exceeds the 0.2% expected rise, it may reinforce expectations of a rate cut by the Federal Reserve in September. This scenario could lead to a further weakening of the dollar, pushing USD/JPY lower.
Conversely, a softer inflation figure could diminish rate cut prospects, potentially providing some support to the dollar. Traders will also keep an eye on any updates regarding the BOJ’s bond purchase plans, as any unexpected announcements could trigger significant market movements.
USD/JPY Technical Analysis – 11/07/2024
USD/JPY is fluctuating around the 200 EMA, indicating a consolidation phase. The position of the 200 EMA below the current price suggests a slight bullish trend on the 15-minute timeframe.
If the price manages to hold above the 200 EMA and breaks through the immediate resistance at R1, we could see a move towards R2 and potentially higher. On the other hand, if the price fails to hold the 200 EMA and breaks below the immediate support at S1, a further decline towards S2 (161.256) and even S3 (161.047) could occur. This might happen if the inflation data fails to meet expectations, strengthening the dollar.
USD/JPY Fibonacci Key Price Levels 11/07/2024
Short-term traders planning to invest in USD/JPY today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 161.385 | 161.802 |
| 161.256 | 161.931 |
| 161.047 | 162.139 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
