We’ve got U.S. inflation data comin’ up next!
Can the core PCE price index spur a breakout for USD/JPY or will it stay in range?
Before moving on, ICYMI, yesterday’s watchlist looked at a short-term symmetrical triangle on NZD/USD ahead of the U.S. GDP report. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. preliminary GDP reading downgraded from 2.9% to 2.7% for Q4 2022
U.S. Q4 preliminary price index upgraded from 3.5% to 3.9% vs. expectations of no change
U.S. EIA crude oil inventories rose by 7.6M barrels vs. estimated 2.9M gain
Japanese Jan national core CPI up from 4.0% y/y to 4.2% vs. 4.3% forecast
U.K. GfK consumer climate index improved from -45 to -38 vs. -43 forecast in Feb
BOJ Governor nominee Ueda: Low interest rates appropriate for now
Ueda looking to maintain yield curve control if trend inflation does not improve
Germany’s final GDP downgraded to show 0.4% quarterly contraction from previous -0.2% reading
German Feb GfK consumer climate index rose from -33.8 to -30.5 vs. -30.6 forecast
U.S. core PCE price index at 1:30 pm GMT
U.S. personal income and spending data at 1:30 pm GMT
U.S. new home sales at 3:00 pm GMT
FOMC member Jefferson’s speech at 3:15 pm GMT
BOE MPC member Tenreyro’s speech at 4:30 pm GMT
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What to Watch: USD/JPY
USD/JPY 1-hour Forex Chart by TradingView
This pair has been stuck in its range for the most part of the week, as yen traders were likely on edge ahead of BOJ Governor-Designate Ueda’s speech earlier today.
Since the incoming head honcho expressed support for the current low interest rate stance, USD/JPY managed to keep its head above water and set its sights on the range resistance again.
Can the next big market catalyst spur a bigger move?
Uncle Sam will be releasing its core PCE price index, which is said to be the Fed’s preferred inflation measure.
Analysts are predicting a slight pickup from 0.3% to 0.4%, which would be another point in favor of aggressive tightening efforts. Much stronger than expected results could lead to another run higher for the Greenback, possibly triggering a bullish breakout from the range.
Then again, the possibility of more interest rate hikes on the horizon have been priced in for a while now, so there could be a quick opportunity for profit-taking here.
If the range resistance at 135.25 holds, USD/JPY could retreat back to the bottom at the 134.00 major psychological mark.
Note that Stochastic is inching closer to the overbought region to reflect exhaustion among buyers while the gap between the moving averages is narrowing to hint at slowing upside pressure.
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