USD/JPY struggles to reclaim 147.00 after recent pullback from 150+ levels.
Japan's economic growth falls short of expectations in Q4 2023.
All eyes on who owns bitcoinUS CPI data for clues about Fed's rate cut timeline.
The USD/JPY exchange rate continues to hover below the 147.00 threshold as market participants brace for potentially game-changing US inflation figures. The currency pair has retreated significantly from its early March peaks above 150.00, reflecting shifting expectations about monetary policy divergence between the Federal Reserve and Bank of Japan.
Japan's economic performance disappointed analysts Monday morning, with Q4 GDP expanding just 0.1% quarter-over-quarter versus the anticipated 0.3% growth. While this represents an improvement from Q3's 0.1% contraction, the annualized figure of 0.4% growth fell well short of the projected 1.1% rebound. These lackluster numbers reinforce concerns about Japan's fragile economic recovery.
US Inflation Outlook: What Market Participants Should Watch
February's consumer price index report takes center stage this week, with economists predicting mixed results. The monthly headline CPI is expected to accelerate to 0.4% from January's 0.3%, while core CPI (excluding volatile food and energy components) might moderate to 0.3% from 0.4%. Year-over-year figures could show headline inflation holding steady at 3.1%, with core inflation potentially easing slightly.
Technical Perspective: USD/JPY Price Action Analysis
The currency pair enters the new trading week with clear bearish momentum, struggling to regain lost ground after peaking near 150.70 in early March. Current levels represent more than a 2.5% decline from those recent highs, with the pair now testing critical support zones.
Recent price action suggests potential continuation of the downward correction that began after USD/JPY snapped its eight-week winning streak. The next significant support level appears around 146.00, coinciding with the rising 200-day moving average currently at 146.22. Market technicians will be watching these levels closely for signs of either stabilization or further downside.
The coming days could prove pivotal for USD/JPY direction, with the US inflation report potentially serving as a catalyst for either renewed dollar strength or extended yen recovery. Traders should remain alert to shifting risk sentiment and any surprises in the inflation data that could alter expectations about the Fed's policy path.