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USD/JPY is currently trading at 111.32, up from the lows of 111.24 and reached a high of 111.38 in the Tokyo open.

USD/JPY ranged sideways between 111.10 and 111.45 overnight with some softness in the greenback following the US CPI miss:

“US consumer prices remain benign, the headline Feb CPI posting a 0.2% m/m gain while the core index posted a lower than expected 0.1% gain; the annual core pace moderated a touch to 2.1% from 2.2%. The National Federation of Independent Business’ small business optimism index posted a 0.5pt gain in February to 101.7, boosted by the reopening of the US government and stabilisation in markets. That’s the first gain in five months though the index broadly remains at historically elevated levels.”

Subsequently, the US 10yr treasury yield dropped sharply, from 2.67% to 2.60%, and the 2yr yield fell from 2.50% to 2.45%, pressuring the pair within the overnight range. With respect to the Fed, the futures markets had continued to price little chance of any further Fed rate hikes in this cycle, but a 20% chance of a cut by December.

BoJ (15th March):

“We expect no change in policy. Recent comments from Kuroda highlight that further easing could be contingent on the JPY. These are not credible however as the BOJ is hamstrung by a deterioration in JGB conditions as evidenced in its dealer survey. This, alongside global growth worries, could feature prominently in the upcoming meeting,” analysts at TD Securities wrote.  

USD/JPY levels

The 4 hours chart shows that the pair is holding above its 100 SMA, currently at around 111.10, which remains above the 200 SMA although both are losing their upward strength – noted Valeria Bednarik, Chief Analyst at FXStreet:

“In the mentioned chart, the Momentum indicator maintains a bullish slope within positive levels, but the RSI anticipates a downward move ahead as it turned south in neutral territory. Above 111.45, the bullish case can make some progress, while bears could take over on a break below 110.85.”