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USD/JPY at fresh daily lows around 129.00 after US PCE.

  • USD/JPY maintains its tender tone and reacts little to the release of the US PC Price Index.
  • Bets on smaller rate hikes by the Fed act as a headwind for the USD and put pressure.
  • However, traders prefer to stay on the sidelines awaiting the FOMC meeting next week.

The pair USD/JPY remains depressed during the early hours of the North American session and falls to a new daily low of around 129.00 after the release of US macroeconomic data.

The US dollar pared some of its modest intraday gains in reaction to mixed Personal Consumption Expenditure (PCE) figures which, in turn, put some pressure on the USD/JPY pair. The US Bureau of Economic Analysis reported Friday that the Core Personal Consumption Price Index – the Fed’s preferred indicator of inflation – declined to a year-on-year rate of 4.4% in December, down from 4.7% previously. However, the monthly data rose to 0.3%, compared to 0.2% in November and estimates. However, the data reinforces the bets on a smaller increase of 25 basis points in the Fed rates in February and acts as an adverse factor for the dollar.

The Japanese yen (JPY), meanwhile, is being supported by fresh speculation that high inflation could invite a tougher stance from the Bank of Japan later this year. This further contributes to the offered tone surrounding the USD/JPY pair. However, signs of stability in equity markets weaken the safe haven yen and could help limit losses in major currencies. Traders may also refrain from aggressive bets, preferring to stay on the sidelines ahead of next week’s key event for central banks: Wednesday’s long-awaited FOMC decision.

Even from a technical perspective, the USD/JPY pair has been oscillating between two converging trend lines for the past two weeks or so. This constitutes the formation of a symmetrical triangle and points to a consolidation phase. Therefore, it would be prudent to wait for a sustained break below triangle support, currently around the 128.80-128.75 region, before positioning for an extension of the recent sharp pullback from more than a three-decade high.

Technical levels to watch

USD/JPY

Overview
Last price today 129.86
Today Daily Variation -0.39
today’s daily variation -0.30
today’s daily opening 130.25
Trends
daily SMA20 130.45
daily SMA50 134.04
daily SMA100 139.59
daily SMA200 136.76
levels
previous daily high 130.62
previous daily low 129.02
Previous Weekly High 131.58
previous weekly low 127.22
Previous Monthly High 138.18
Previous monthly minimum 130.57
Fibonacci daily 38.2 130.01
Fibonacci 61.8% daily 129.63
Daily Pivot Point S1 129.31
Daily Pivot Point S2 128.37
Daily Pivot Point S3 127.71
Daily Pivot Point R1 130.9
Daily Pivot Point R2 131.56
Daily Pivot Point R3 132.5

Source: Fx Street

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