The USD/JPY currency pair continued its upward trajectory for the third consecutive day, reaching a one-week high in the 153.70-153.75 range on Wednesday. This rally benefits from a slight positive shift in market sentiment, with the US Dollar exhibiting strength. However, the looming release of US Consumer Price Index (CPI) data could limit further gains. As traders anticipate the CPI figures, the USD/JPY pair's near-term prospects remain closely tied to this crucial economic indicator.
A breakthrough above the 153.00 level could pave the way for the USD/JPY pair to accelerate its recovery toward the 154.70-154.75 region, potentially reaching the psychological 155.00 mark. A sustained breakout beyond the 152.75 confluence hurdle is seen as a key trigger for bullish traders, supporting further intraday appreciation. This critical area includes the 23.6% Fibonacci retracement level of the January-February decline and the 200-day Simple Moving Averages (SMA), serving as a pivotal point for the currency pair.
Conversely, if the USD/JPY pair falls below the 152.75 region, it could face accelerated decline towards the 152.00 mark. Traders are keenly observing this level as it could signal a shift in momentum for the currency pair.
The core CPI is anticipated to remain above the Federal Reserve's target at 3.1% compared to a year ago. Meanwhile, the Consumer Price Index is expected to show an annual increase of 2.9% in January, mirroring the previous month's reading. The core gauge, which excludes volatile food and energy prices, is forecast to rise by 0.3% on a monthly basis and 3.1% on an annual basis.
The USD/JPY pair has been recovering from sub-151.00 levels, a near two-month low reached last Friday. This upward movement marks a third consecutive day of gains amid concerns about Trump's trade tariffs impacting market dynamics.
Despite recent gains, analysts suggest that the USD/JPY's recovery might attract fresh sellers and could remain capped near the 154.00 mark. The pair's price action is influenced by both the Federal Reserve's rate-cut trajectory and the Bank of Japan's rate-hike plans, which provide meaningful impetus to the USD/JPY pair and could offer support to the Japanese Yen, respectively.
The upcoming US consumer inflation data, expected during the early North American session, holds significant sway over the USD/JPY pair's near-term movements. Market participants are eager to assess how these figures will impact the Federal Reserve's monetary policy and subsequent demand for the US Dollar.