15 May 2024, USD/JPY
Event to watch out for today:
15:30 GMT+3. USD - Consumer Price Index
USDJPY:
The Dollar-Yen pair started a neat decline towards the 156.30 area on Wednesday during the early Asian session. Earlier, the pair's rise was fueled by speculation that the Federal Reserve (Fed) may keep rates on hold for longer amid rising inflation. However, concerns that Japanese authorities may intervene in the currency markets may limit USD/JPY's rise.
Fed Chairman Jerome Powell reiterated on Tuesday that inflation is falling more slowly than expected and April PPI data gave more reason to keep rates on hold for longer. However, Powell also said he did not expect the Fed to raise rates. Hawkish statements from Fed officials could boost the US Dollar (USD) and create a tailwind for the USD/JPY pair.
On Tuesday, the Bureau of Labor Statistics reported that the U.S. Producer Price Index (PPI) rose 2.2% in April from March's 1.8% increase (revised from 2.1%) and matched expectations. Meanwhile, the core PPI, which excludes volatile food and energy costs, rose 2.4% y/y over the same period, compared to a 2.1% increase in March. On a month-on-month basis, the PPI and core PPI rose 0.5% y/y in April.
As for the yen, Finance Minister Shunichi Suzuki said on Tuesday that the Japanese government will work closely with the Bank of Japan (BoJ) in the foreign exchange market and will take all possible measures if necessary. Concerns about further currency intervention by the Japanese authorities may provide some support to the Japanese yen (JPY) and limit the pair's growth.
Trading recommendation: Watch the level of 156.00. If the rebound occurs, take Buy positions.
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