Yen Falters Amid Poor Economic Data

Fundamental Analysis

* Yen Woes: The Japanese Yen continued to weaken against the dollar following the Bank of Japan’s disappointing inflation data release. In April, Japan’s Weighted Median Inflation Index, a key indicator of the nation’s inflation trend, rose by only 1.1%, down from a 1.3% increase in March. This marks the first time since August 2022 that the BOJ’s key measures of underlying inflation have all fallen below the 2% target. As this disinflationary trend gains momentum, uncertainty grows regarding the timing of the BOJ’s next interest rate hike. This data also casts doubt on the BOJ’s belief that price increases are spreading beyond those caused by rising raw material costs and are likely to be sustained by strong domestic demand.

Technical Analysis

* Technical Breakout: USDJPY was traded higher following prior breakout above the previous resistance level 157.10. MACD which illustrate ongoing bullish momentum signal suggest the pair to further extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 158.10. Conversely, a potential retracement is also to be expected and the price could head back towards 156.20 should the price breach back below the 157.10 level.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, the market will be closely monitoring upcoming data from Japan, particularly the Tokyo Consumer Price Index (CPI) inflation, which remains a crucial indicator for Yen traders this week. Additionally, US growth and inflation figures are high-impact releases for investors seeking clues about potential rate cuts from the Federal Reserve.

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Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.