Dollar bulls seem to be getting a bit of a head start leading up to the U.S. CPI release.
Can they sustain the move and take USD/JPY up to the next upside targets?
Before moving on, ICYMI, yesterday’s watchlist checked out the U.S. dollar index closing in on the top of its range. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Fed official Williams expressed confidence that the central bank is on the right track to fight inflation but warns that tighter credit conditions are affecting the economy
API private oil inventories rose by 3.618 million barrels versus estimates of a reduction of 0.9 million barrels, suggesting weaker demand
U.S. President Biden met with Congressional leaders for debt ceiling negotiations, says discussions will continue on Friday
Japanese leading indicators fell from 98.0% to 97.5% in March versus estimates of a dip to 97.7%
Italian industrial production slipped by 0.6% month-over-month in March versus the projected 0.2% uptick and earlier 0.2% decline
Price Action News
Overlay of USD Pairs 15-min
There wasn’t much in the way of top-tier catalysts in the past trading sessions, although it’s worth noting that U.S. equities and Asian indices closed lower.
Meanwhile, the safe-haven dollar managed to pocket a few gains, as traders are likely holding out ahead of today’s U.S. CPI release.
There was also some progress on the debt ceiling front, at least according to U.S. President Biden who said that talks with Congressional leaders had been productive.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. headline and core CPI at 12:30 pm GMT
U.S. EIA crude oil inventories at 2:30 pm GMT
SNB Chairman Jordan’s speech at 4:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
USD/JPY 15-min Forex Chart by TV
The dollar seems to have found its legs once again, as the currency was lifted by Biden’s debt ceiling negotiations and a bit of risk aversion in the markets.
The U.S. CPI report for April should bring additional volatility in the next few hours, with analysts counting on a slight pickup in headline inflation.
Stronger-than-expected results could mean more gains for the U.S. currency, possibly taking USD/JPY up from this current area of interest at the pivot point (135.10).
Dollar bulls could set their sights on the nearby ceiling at R1 (135.47) or all the way up to R2 (135.74), which is still well within the pair’s average daily volatility of 120 pips.
Downbeat data, on the other hand, could confirm that the Fed is bound to pause its rate hikes pretty soon.
In that case, USD/JPY might duck below the resistance-turned-support zone and aim for the previous day’s lows near S1 (134.83) or the next potential floor at S2 (134.46).
