Trade USDJPY on the US CPI Data Today

Traders are expecting volatility to pick up today in currency markets as the market awaits updates on both the geopolitical and fundamental fronts. Most market participants do expect the tariff issues to roll on, but longer-term FX players will be looking to the key inflation numbers out later today for a more fundamental view on the dollar.

The US CPI data is due out soon after the New York open, with the monthly numbers expected to show a 0.2% increase for the headline CPI data and a 0.3% increase for the Core CPI data, while the year-on-year numbers are expected to show a 2.5% increase for the CPI and a 2.9% increase for the Core CPI data. Any significant deviation in the print should see big moves in FX markets, and as always, the USDJPY has the propensity to move by bigger percentages than other majors, especially when potential interest rate differentials are taken into consideration.

USDJPY is currently trading around the 145.00 level, with options interest helping to keep it in a relatively tight range for the last couple of sessions. However, that could all change on the US data. A higher number, influenced by President Trump’s April tariff implementation, could see short-term resistance near 146.00 challenged in short order, while weaker numbers increasing the chance of a swifter Fed rate cut would see short-term support on the 200 Day Moving Average come into focus just under 144.00. Traders are expecting to see moves in the market on the data in any case, with even an ‘on expectation’ print likely to lead to a resumption of recent trends.

Resistance 2: 148.64 – May High
Resistance 1: 146.13 – Trendline Resistance

Support 1: 143.88 – 200 Day Moving Average
Support 2: 142.10 – May Low

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