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USD/JPY briefly tests above 146.00 post-CPI, fades back to flat on the day

  • The US Dollar broadly climbed on Thursday after US CPI inflation broadly beat the street.
  • US Initial Jobless Claims also improved, US labor market looking stubbornly firm.
  • Japan Current Account, US PPI still due for Friday.

The USD/JPY climbed early in Thursday’s US market session after US Consumer Price Index (CPI) inflation numbers broadly beat market forecasts, with inflation stepping higher in December and completely swamping out market hopes for signs that rate cuts would be impending soon.

US CPI inflation climbs to 3.4% in December vs. 3.2% expected

US headline CPI inflation for the year ended December came in at 3.4% versus the market forecast of 3.2%, handily climbing over the previous period’s 3.1. December’s MoM CPI came in higher than expected at 0.3% versus the forecast 0.2%, and climbing further over November’s 0.1% print.

US Initial Jobless Claims for the week ended January 5 also came in better than expected, printing at 202K versus the anticipated 210K, though the previous week did see a slight upside revision to 203K  (pre-revision 202K).

The US Dollar (USD) caught a broad-market bid after the CPI inflation print as market hopes of impending rate cuts from the Federal Reserve dashed on the rocks of rising inflation metrics. Many investors were hoping for inflation to cool at least enough to keep the dream of a March rate cut alive, with money markets pricing in a 60% chance of a March rate cut as recently as yesterday.

The week isn’t over yet, and the USD/JPY still has to grapple with Japanese Trade Balance and Current Account figures due early Friday, while US producer-facing inflation will be printing tomorrow. The US Producer Price Index (PPI) for December is expected to tick slightly higher from 0.0% to 0.1%, while annualized Core PPI for the year ended December is expected to clip lower from 2.0% to 1.9%.

USD/JPY Technical Outlook

The USD/JPY rose to a near-term high of 146.41 before falling back into Thursday’s intraday levels with the US Dollar getting driven higher against the already-softening Japanese Yen (JPY). With the USD/JPY continuing to test higher, the 200-hour Simple Moving Average (SMA) is set to continue climbing through the 144.00 handle, building out an intraday technical floor.

Daily candlesticks have the USD/JPY running into near-term technical resistance at the 50-day SMA descending into 146.00, and prices are caught on the topside of the 200-day SMA approaching 144.00, with USD/JPY caught in the congestion zone of the two moving averages.

USD/JPY Hourly Chart

USD/JPY Daily Chart

USD/JPY Technical Levels

 

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