USD/JPY Rate Clears April Opening Range Ahead of US CPI

USD/JPY Outlook

USD/JPY bounces along the 50-Day SMA (133.24) after clearing the opening range for April, and the update to the US Consumer Price Index (CPI) may prop up the exchange rate as the report is anticipated to show sticky inflation.

USD/JPY rate clears April opening range ahead of US CPI

USD/JPY fails to extend the series of higher highs and lows carried over from last week as it pulls back from a fresh monthly high (133.87), but developments coming out of the US may keep the exchange rate afloat as the Federal Reserve acknowledges that ‘some additional policy firming may be appropriate.’

In turn, the US CPI may put pressure on the Federal Open Market Committee (FOMC) to further combat inflation as the core rate is projected to increase to 5.6% in March from 5.5% per annum the month prior.

Evidence of persistent price growth may generate a bullish reaction in the Greenback as it fuels speculation for higher US interest rates, and USD/JPY may attempt to retrace the decline from the March high (137.91) especially as the newly appointed Bank of Japan (BoJ) Governor, Kazuo Ueda, emphasizes that the central bank ‘will be continuing the current easy monetary policy.’

With that said, an uptick in the core US CPI may fuel the recent advance in USD/JPY as it boosts speculation for another Fed rate hike, and the exchange rate may continue to trade to fresh monthly highs as it clears the opening range for April.

Japanese Yen Price Chart – USD/JPY Daily

Chart Prepared by David Song, Strategist; USD/JPY on TradingView

• USD/JPY appears to have reversed course ahead of the March low (129.65) as it climbs back towards the 50-Day SMA (132.64), and the exchange rate may stage a further advance as it clears the opening range for April.
• Need a break/close above the 132.60 (38.2% Fibonacci retracement) to 133.90 (23.6% Fibonacci retracement) region to open up the 136.00 (23.6% Fibonacci expansion) handle, with a move above the 200-Day SMA (137.20) bringing the March high (137.91) on the radar.
• However, failure to break/close above the 132.60 (38.2% Fibonacci retracement) to 133.90 (23.6% Fibonacci retracement) region may push USD/JPY back towards the monthly low (130.63), with a move below 130.20 (61.8% Fibonacci extension) bringing the March low (129.65) on the radar.

— Written by David Song, Strategist

Follow me on Twitter at @DavidJSong