The USD/JPY pair finds itself at a pivotal juncture, hovering near the 154.25 base as traders brace for the upcoming US Core Personal Consumption Expenditures (PCE) inflation data. Recent market dynamics have seen the 50-day exponential moving average (EMA) cap bullish efforts around the 155.00 level. Meanwhile, the global foreign exchange landscape remains marked by a subdued US Dollar and stabilized risk sentiment.
In Europe, Germany's regional inflation figures showed signs of cooling in January, fueling speculation of potential rate cuts from the European Central Bank (ECB). This has added pressure on USD/JPY ahead of Germany's nationwide data release. The ECB recently reduced interest rates by 25 basis points, signaling the continuation of its rate-cutting cycle, which has implications for currency movements.
Technical indicators paint a cautious picture for USD/JPY. Should the 154.25 base, aligned with the upper band of the Ichimoku cloud, falter, the pair may test the 153.30 zone before descending towards the 151.40-152.00 range. Further declines could push prices toward December's base near 149.00, coinciding with the 50% Fibonacci retracement of the September-January uptrend.
Despite recent pressures, USD/JPY has managed to hold above the 154.25 level for four consecutive trading days. However, bearish risks persist, with RSI hovering around its neutral mark of 50, a decelerating Stochastic oscillator, and MACD shifting into negative territory. A break above 154.25 could pique buyers' interest, though a significant hurdle awaits at the 20-day EMA of 155.65—a critical level that bulls must surpass to target the 157.00 resistance zone.
Elsewhere in the market, gold prices have surged to an all-time high of $2,800 during early European trading, buoyed by safe-haven demand amid geopolitical tensions and US President Donald Trump's threatened trade tariffs. Similarly, EUR/USD has encountered selling pressure, dropping below 1.0400 in Friday's European session, while GBP/USD trades within a narrow band above 1.2400.
Traders are closely monitoring these developments as they await the US PCE data, which could provide further insights into inflationary pressures and influence monetary policy decisions.