USD/JPY:Fundamental + Technical Analysis Points to Bullish Setup
Atualizado
The US Dollar (USD) partially recouped its slight decline earlier in the day as the US Bureau of Economic Analysis (BEA) released data indicating that the headline PCE Price Index rose by 0.4% in April, a significant increase compared to the previous month's 0.1% growth. Furthermore, the annual rate saw a rise to 4.4%, surpassing expectations of a decrease to 3.9% from March's 4.2%. Detailed figures revealed that the Core PCE Price Index, which serves as the Federal Reserve's preferred measure of inflation, inched up to 4.7% from 4.6%, surpassing consensus forecasts.
These data points reinforced the market's belief that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. Consequently, this provided some support for the US Dollar and acted as a tailwind for the USD/JPY pair. Presently, market expectations indicate a more than 50% likelihood of a 25 basis point increase occurring at the June FOMC meeting. This sentiment is further bolstered by a recent rise in US Treasury bond yields, resulting in a widening US-Japan interest rate differential and diverting capital away from the Japanese Yen (JPY).
Moreover, the Bank of Japan's (BoJ) adoption of a more accommodative stance is expected to continue weakening the JPY, indicating that the path of least resistance for the USD/JPY pair is to the upside. Even from a technical standpoint, the emergence of buying interest following a brief dip on Friday, along with the pair's ability to remain above the 140.00 level, reinforces the positive setup. Consequently, there is a strong possibility of further upward momentum towards the next significant resistance zone around 140.45-140.50. Our technical analysis suggests that the price may experience a pullback and potentially reach the 61.8% Fibonacci retracement area before embarking on a new bullish move in alignment with the prevailing trend.
These data points reinforced the market's belief that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. Consequently, this provided some support for the US Dollar and acted as a tailwind for the USD/JPY pair. Presently, market expectations indicate a more than 50% likelihood of a 25 basis point increase occurring at the June FOMC meeting. This sentiment is further bolstered by a recent rise in US Treasury bond yields, resulting in a widening US-Japan interest rate differential and diverting capital away from the Japanese Yen (JPY).
Moreover, the Bank of Japan's (BoJ) adoption of a more accommodative stance is expected to continue weakening the JPY, indicating that the path of least resistance for the USD/JPY pair is to the upside. Even from a technical standpoint, the emergence of buying interest following a brief dip on Friday, along with the pair's ability to remain above the 140.00 level, reinforces the positive setup. Consequently, there is a strong possibility of further upward momentum towards the next significant resistance zone around 140.45-140.50. Our technical analysis suggests that the price may experience a pullback and potentially reach the 61.8% Fibonacci retracement area before embarking on a new bullish move in alignment with the prevailing trend.
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