The USD/JPY pairing finds itself on shaky ground, recently slipping below the 147.00 level. The turbulence appears to be the result of significant drops during the past week, largely influenced by the sudden rise in the Dollar Index.
Japan’s Q4 GDP report didn’t hit the mark, a clear factor that has led to diverse reactions to US CPI inflation. Investors eagerly await the release of US CPI inflation data, hoping for indications of swift inflation reductions, thus pressuring the Federal Reserve into early rate reductions.
Notably, Japan’s Q4 GDP did improve slightly from a -0.1% drop to a modest 0.1% increase, however, it failed to meet the anticipated 0.3%. On an annual basis, the figures again fell short of expectations – recording a 0.4% growth rate against the expected 1.1% recovery rate.
As we head into the trading week, a prominent weakness can be noticed in the USD/JPY pair, which stays below the critical 147.00 point. Following weeks of consistency or mild growth, the pair has now veered off course into a negative trend. Should it continue, subsequent depreciation of the pair could follow. Swift reactions are therefore essential for prudent traders and investors going forward.
Projections for the Month over Month US CPI for February imply an uplift to 0.4% from 0.3%, fueled by current inflation turmoil. Likewise, the Core Month over Month CPI, excluding unpredictable food and energy costs, is expected to backslide to 0.3% from 0.4%.
Investors restlessly await the Federal Reserve’s potential rate reduction announcement and the unveiling of the US CPI inflation data. Given the increased market volatility and persistent inflation pressure, the exact effect on the USD/JPY performance is difficult to predict. The imminent decisions by the Federal Reserve hold significant potential to sway the USD/JPY pair, making the upcoming time crucial for investors to shape their strategies accordingly.
