USD/JPY climbing back towards 150.00 after US CPI inflation beat kicks off a round of risk aversion

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• The USD/JPY climbed on Thursday, extending a bullish recovery for the pair.
• The US Dollar is inching towards the 150.00 level once again as the Greenback climbs on risk-off markets.
• US CPI inflation data beat has markets worried that the Fed will keep interest rates higher and longer than previously anticipated.

The USD/JPY is hanging close to Thursday’s highs of 149.83, inches away from retesting the 150.00 major handle, a price level that has drawn interest from the Bank of Japan (BoJ) for FX market intervention in the past.

Forex Today: The Dollar reclaims the throne after US inflation reports

Japan’s Producer Price Index (PPI) and Machinery Orders data fell short of expectations on Wednesday. September’s Japan PPI recorded a discouraging -0.3%, failing to the meet the anticipated 0.1% increase and marking a decline from the preceding month’s 0.3% figure.

Additionally, Machinery Order for August saw a decline of 0.5%, showing an improvement from the prior reading of -1.1%, but still falling notably below the projected figure of 0.4%.

In September, the annual US Consumer Price Index (CPI) inflation rate registered at 3.7%, beating the market consensus of 3.6%.

Initial Jobless Claims experienced a slight increase to 209K, marginally lower than the market forecast of 210K. 

Better-than-expected economic data, combined with inflation that continues to surpass market expectations, see investors worried about the increased likelihood of the US Federal Reserve (Fed) holding interest rates higher for even longer than previously expected.

Friday’s market session sees nothing from Japan on the economic calendar, and markets will be looking to close out the trading following a reading of the Michigan Consumer Sentiment Index for October, due at 14:00 GMT and expected to retreat slightly from 68.1 to 64.7.

USD/JPY Technical Outlook

The USD/JPY is hanging close to Thursday’s highs of 149.83, just inches away from the 150.00 major handle. The pair is well-bid off the day’s early lows near 148.95, and USD/JPY gained 0.42% on Thursday to close out trading just shy of 149.80.

Hourly candlesticks sees the USD/JPY accelerating away from median price points, with intraday price action trading well north of the 200-hour Simple Moving Average (SMA) with the 50-hour SMA confirming a bullish crossover of the longer moving average.

On the daily candles the USD/JPY remains firmly bullish, with the pair knocking on the year’s highs and trending well into bullish territory, with technical support coming from the 50-day SMA, currently rising into the 147.00 major handle.

USD/JPY Hourly Chart

USD/JPY Daily Chart

USD/JPY Technical Levels