USD/JPY Attracts Dip-Buying Near 146.00 Mark Amid Positive Risk Tone and Awaited US CPI Report
The USD/JPY pair has seen a reversal from its weekly low near the 146.00 mark, supported by a positive risk tone and a modest USD rebound. Traders are eagerly waiting for the release of the US Consumer Price Index (CPI) report, which is expected to bring volatility to the markets and impact the currency pair’s direction.
The headline CPI is forecasted to rise 0.2% MoM in July and 2.9% annually, while the core CPI is expected to decrease slightly to 3.2%. A weaker-than-expected CPI print could lead to bets for a 50 bps interest rate cut at the September FOMC meeting, potentially weakening the USD and dragging the USD/JPY pair lower.
Ahead of the CPI data, repositioning trades have helped the USD Index (DXY) gain traction, while positive sentiment in equity markets and reduced chances of a BoJ rate hike have weighed on the JPY and supported the USD/JPY pair. Geopolitical tensions in the Middle East could limit market optimism and support the JPY’s value.
Technical analysis suggests a potential upward move for the USD/JPY pair, with resistance at 147.80 and targets at 148.00 and 148.20. However, oscillators indicate a possibility of fresh selling pressure capping any significant recovery attempts. Support levels are seen at 146.00, 145.50, and 144.20.
In conclusion, the USD/JPY pair’s movements are influenced by a combination of factors, including economic data releases, geopolitical tensions, and market sentiment. Traders should closely monitor the upcoming US CPI report and technical levels to make informed decisions regarding their positions in the currency pair.