USD/JPY Finds Support Around 109.220 as US Inflation Rises by 5%

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The USD/JPY currency pair on Thursday pulled back to find support at the 109.220 level as US inflation soared to 5% for the first time in 13 years. The currency pair continues to trade within an ascending channel formation in the 60-min chart.

The pair remains pinned below the 100-hour moving average. Thursday’s pullback pushed the currency pair closer to the oversold levels of the 14-hour RSI. This could trigger a short-term rebound going into the tail end of the week.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in both markets. On Friday, the US consumer price index for May soared 5% on a year-over-year basis. This is the highest level  US inflation has reached since the global financial crisis of 2008. The (MoM) growth was 0.6% compared to an expectation of 0.7%. 

On the other hand, the consumer price index ex-food and energy rose 3.8% (YoY) compared to an expectation of 3.4%. The (MoM) equivalent came in at 0.7% versus 0.4%. The initial jobless claims for the week to June 4 narrowly missed the expected tally of 370k with a count of 376k. Traders will be looking forward to Friday’s preliminary Michigan Consumer Sentiment data for June.

In Japan, the gross domestic product for Q1 beat the expected (QoQ) change of -1.2% with a change of -1%. Annualized GDP also came in better with a change of -3.9% versus -4.8%. Japan’s preliminary leading economic index for April narrowly beat 102.9 with 103.

USD/JPY Technical Analysis (the 60-min Chart)

Technically, the USD/JPY currency pair appears to be trading within a gently ascending channel formation in the 60-min chart. This indicates a slight short-term bearish bias in the market sentiment.

The bulls will target short-term rebound profits at around 109.640 or higher at 109.948. On the other hand, the bears will look to extend the current pullback towards 109.063 or lower to 108.736.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to be trading within an ascending channel formation. The pair recently rallied closer to overbought levels of the 14-day RSI before pulling back.

The bulls will look to ride the current bull run by targeting profits at around 110.533 or higher at 111.685. On the other hand, the bears will target pullbacks at around 108.079 or lower at 106.762.

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