It looks like dollar bulls are just refusing to back down, so I’m seeing a small reversal pattern on USD/JPY.
Can the upcoming U.S. releases spur a big rally?
Before moving on, ICYMI, yesterday’s watchlist looked at USD/JPY’s uptrend pullback levels ahead of U.S. retail sales data. 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:
U.S. headline retail sales slumped 0.8% m/m vs. estimated 0.2% dip in January, core retail sales down 0.6% m/m vs. projected 0.2% uptick
Empire State manufacturing index improved from -43.7 to -2.4 vs. consensus at -13.7 in February, as shipments edged higher
U.S. weekly initial jobless claims came in better than expected at 212K vs. 219K consensus and 220K previous
U.S. industrial production ticked down 0.1% m/m in January vs. projected 0.5% gain while capacity utilization dipped from 78.7% to 78.5%
RBNZ Governor Orr says that the central bank needs to truly anchor inflation expectations to 2% and have a lot more to do to get there
Japanese Finance Minister Suzuki says weak yen has pros and cons, reiterates that they are closely watching FX moves with urgency
BOJ Ueda says they will look into policy action when target conditions are met, expressed confidence in spring wage negotiations
Price Action News
Overlay of USD vs. Major Currencies Chart by TradingView
Weaker than expected U.S. retail sales data forced the Greenback to return some of its post-CPI gains, as subdued consumer spending activity led traders to rethink hawkish Fed bets.
However, the dollar was still off to a running start early today, as traders may be adjusting positions ahead of the PPI release and UoM consumer sentiment index later on.
On the flip side, the yen lost ground once more when Finance Minister Suzuki had a couple of jawboning remarks while BOJ head Ueda reiterated that they’re waiting on more convincing signs of progress before adjusting policy.
Upcoming Potential Catalysts on the Economic Calendar:
U.K. retail sales at 7:00 am GMT
U.S. headline and core PPI at 1:30 pm GMT
U.S. building permits and housing starts at 1:30 pm GMT
U.S. UoM consumer sentiment index at 3:00 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
USD/JPY 15-min Forex Chart by TradingView
After bouncing off that support zone we were watching yesterday, it looks like USD/JPY giving another set of signals for a continuation of the climb.
Uncle Sam is due to print a couple more top-tier releases today, namely the PPI and UoM consumer sentiment figures, and these are considered leading indicators of inflation and spending.
Improvements on both fronts might be enough to convince more dollar bulls to charge, as this might reinforce expectations that the Fed could delay rate cuts until much later in the year.Note that the yen has been on weak footing earlier today, following jawboning remarks from Finance Minister Suzuki and BOJ head Ueda’s reminder that monetary conditions will remain accommodative even after exiting negative rates.
The pair broke through the neckline of a tiny double bottom pattern on its 15-min time frame and appears to be completing a retest. If the area of interest holds, buyers could take USD/JPY to the next upside target at R1 (150.47) near a minor psychological mark or onto R2 (151.04).
On the other hand, weak U.S. data might put USD/JPY back in selloff mode and on track towards testing support at S1 (149.41) or lower.
How do you think the U.S. reports might turn out and how will this pair react?
