Home USD/JPY Forecast: Japan’s Wholesale Prices Rise to 9.3%

USD/JPY Forecast: Japan’s Wholesale Prices Rise to 9.3%

  • Producer prices in the US increased more than anticipated last month.
  • Japan’s wholesale prices increased by 9.3% from a year earlier in November.
  • The yen-based import price index increased by 28.2% in November.

Today’s USD/JPY forecast is bullish. The dollar strengthened on Monday against the yen due to data showing producer prices in the US increased more than anticipated last month. This data indicated ongoing inflationary pressures and fueled concerns that the Federal Reserve would need to maintain higher interest rates for longer.

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According to data released Monday, Japan’s wholesale prices increased 9.3% from a year earlier in November. This pace of growth was nearly identical to the previous month and provided the first indication of an inflation peak amid falling global commodity prices. It was the 21st month in a row that wholesale prices have increased year over year.

The figures may provide some comfort for Japan’s economy, which is heavily dependent on fuel and raw materials imports even as food and energy prices continue to rise.

According to Bank of Japan (BOJ) data, the yen-based import price index increased by 28.2% in November compared to the same month a year earlier, a substantial decline from October’s revised annual increase of 42.3%.

Since the currency has recovered from multi-decade lows, import price increases have been restrained.

Japanese wholesale and consumer inflation have been rising recently, driven by rising global commodity prices and the weaker yen, which raises the cost of imports. Policymakers are concerned that this trend could harm Japan’s shaky economic recovery.

USD/JPY key events today

There will not be any key news releases from Japan or the United States today, so the price will likely consolidate ahead of US inflation data and the Fed meeting.

USD/JPY technical forecast: Prices hang around 30-SMA

USD/JPY forecast

The 4-hour chart shows USD/JPY trading slightly above the 30-SMA. The RSI is also slightly above 50, showing bulls are ahead but not by much. A closer look at the candles shows choppy price action characterized by many wicks. This is a sign of indecision. Neither bears nor bulls are fully committed to one direction.

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The nearest support is at 136.05, and the nearest resistance is at 138.03. The price will likely trade within this range until one side can gather enough momentum to break out. Bulls are currently in the lead, so we might see the price retesting at 138.03.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.