Event to pay attention to today:
15:30 EET. USD – Retail Sales
USDJPY:
The USD/JPY pair demonstrated resilience after losses in the previous session, trading near 152.60 during Asian hours on Friday. The pair is facing challenges following US President Donald Trump’s decision to postpone retaliatory tariffs.Additionally, the US dollar (USD) is weaker as US bond yields have fallen across the curve, despite lingering fears of a global trade war.Investors are now awaiting the release of US retail sales data later in the day.
The US Dollar Index (DXY), a measure of the US dollar’s value against six major currencies, has been losing ground for the fourth consecutive session. The DXY is currently trading around 107.00, and the yields on 2-year and 10-year US Treasuries are at 4.31% and 4.53% respectively at the time of writing.
US core PPI inflation rose to 3.6% y/y in January, beating expectations of 3.3% but falling slightly short of the revised 3.7% (previously reported at 3.5%), reinforcing expectations that the Federal Reserve (Fed) will delay rate cuts until the second half of the year. Furthermore, sustained high inflation may further bolster the forecast that the Fed will maintain interest rates at 4.25-4.50 per cent for a protracted period.On Friday, Japan’s Economy Minister Ryosei Akazawa stated that the country’s authorities will respond appropriately to retaliatory tariffs by the United States. Akazawa also highlighted the multifaceted impact of the weak Japanese yen (JPY) on Japan’s real economy.
The Japanese yen gained ground after the release of the stronger-than-expected producer price index (PPI) data on Thursday, which reinforced the Bank of Japan’s (BoJ) expectations of further rate hikes. This is supported by recent wage growth data, which reinforces the BoJ’s case for further rate hikes.
Trade recommendation: USDJPY: SELL 152.50, SL 153.15, TP 151.80
Origin: FreshForex
