USD/JPY gathers strength to recapture 133.00 as focus shifts to US PCE Price Index
- USD/JPY is aiming to recapture 133.00 as ebbing fears of US banking shakedown have trimmed the Japanese Yen’s appeal.
- The street believes that the US banking sector has already reported its collateral damage.
- Tokyo CPI is expected to soften consecutively led by declining oil prices.
The USD/JPY pair is facing barricades in reclaiming the immediate resistance of 133.00 in the Asian session. The major is expected to resume its upside journey as global banking fears have eased, the US Dollar Index (DXY) has shown a decent recovery, and fears of softening of Japan’s inflation have renewed.
Easing US banking jitters after the announcement of the acquisition of collapsed Silicon Valley Bank’s (SVB) deposits and loans to efforts made by US authorities to infuse confidence among investors have trimmed appeal for the Japanese Yen as a safe-haven.
Investors were gung ho for the Japanese Yen when the US administration alarmed shakedown in the banking sector. However, the market participants believe that the US banking sector has already reported its collateral damage, which has forced them to withdraw funds from the Japanese Yen. This also helped the USD Index in building a cushion around 102.40. A recovery move by the USD Index has already pushed it to above 102.60.
The US Dollar is expected to remain in action ahead of the release of the Federal Reserve’s (Fed) preferred inflation tool, core Personal Consumption Expenditure (PCE) Price Index (Feb) data. According to the estimates, monthly core PCE inflation would accelerate by 0.4%, lower than the former expansion of 0.6%. The annual figure is expected to remain steady at 4.7%.
On the Tokyo front, investors are focusing on Tokyo Consumer Price Index (CPI) data, which will release on Friday. The street is anticipating further softening of the headline Tokyo CPI to 2.7% from the former release of 3.4% led by declining oil prices in the international market. However, the core CPI that strips off oil and food prices is seen expanding to 3.3% from the former release of 3.2%. More stimulus measures are expected from the Bank of Japan (BoJ) in keeping inflation steadily above desired levels.