Daily Analysis For USD/JPY   19-05-2023

Daily Analysis For USD/JPY 19-05-2023

USD/JPY Analysis
Economic Events and Scenario for USD/JPY
Economic Events: -
00:01(United Kingdom) Gfk Consumer ConfidenceHighGBP
00:30(Japan) Core Inflation Rate YoYMediumJPY
00:30(Japan) Inflation Rate MoMLowJPY
00:30(Japan) Inflation Rate YoYHighJPY
00:30(Japan) Inflation Rate Ex-Food and Energy YoYLowJPY
01:00(Belgium) Friday after Ascension DayNoneEUR
04:00(New Zealand) Credit Card Spending YoYLowNZD
04:35(Japan) 3-Month Bill AuctionLowJPY
05:30(Japan) Tertiary Industry Index MoMLowJPY
07:00(Germany) PPI YoYLowEUR
07:00(Germany) PPI MoMMediumEUR
08:00(Slovakia) Current AccountLowEUR
09:00(Greece) Current AccountLowEUR
09:00(Italy) Construction Output YoYLowEUR
09:30(Slovenia) PPI YoYLowEUR
10:00(Slovakia) Unemployment RateLowEUR
11:00(Spain) Consumer ConfidenceMediumEUR
12:00(Montenegro) Current AccountLowEUR
13:30(Canada) Retail Sales YoYHighCAD
13:30(Canada) Retail Sales Ex Autos MoMHighCAD
13:30(Canada) Retail Sales MoMHighCAD
13:45(United States) Fed Williams SpeechMediumUSD
14:00(United States) Fed Bowman SpeechMediumUSD
15:55(Euro Area) ECB Schnabel SpeechMediumEUR
16:00(United States) Fed Chair Powell SpeechHighUSD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD
20:00(Euro Area) ECB President Lagarde SpeechMediumEUR

Today's Scenario: - The USD/JPY pair has experienced a strong rebound, reaching approximately 138.68, following the release of higher-than-expected inflation figures by the Statistics Bureau of Japan for the month of April. The national headline Consumer Price Index (CPI) surged to 3.5%, surpassing the previous reading of 3.2%, while market expectations were for a slowdown to 2.5%. The Core CPI, which excludes food and energy prices, accelerated to 4.1%, exceeding the consensus of 3.4% and the previous release of 3.8%.
Despite the increase in inflation in Japan, the Bank of Japan (BoJ) is likely to maintain its ultra-accommodative monetary policy in order to sustain inflation above 2% for an extended period.
Earlier this week, Japan's Gross Domestic Product (GDP) displayed positive growth in the first quarter. The preliminary Q1 GDP expanded by 0.4%, surpassing estimates of 0.1%. In the previous quarter, GDP growth had remained stagnant. Japan's Economy Minister, Shigeyuki Goto, highlighted that the economy is expected to continue its moderate recovery, driven by improving sentiment, wage hikes, and strong corporate investment appetite.

Buy Scenario: - On the upside, if the USD/JPY pair resumes its upward momentum, it could target the recent peak at 138.75. A breakthrough above this level could propel the pair towards revisiting the yearly high near 139.00.
However, the pair may face challenges from the late November 2022 peak near 139.90 and the psychological level of 140.00, which could impede further gains for USD/JPY buyers. Till we did not advise to buy in USD/JPY.

Sell Scenario: - The recent retreat in the USD/JPY pair can be attributed to the overbought RSI (14) line and cautious sentiment ahead of Federal Reserve (Fed) Chairman Jerome Powell's speech and negotiations surrounding the US debt ceiling. However, bullish signals from the MACD indicator are keeping the pair relatively strong, maintaining levels not seen since November 2022.
Considering these factors, the USD/JPY pair remains in focus for bullish traders. However, a short-term pullback is limited by the presence of a four-day ascending trend line around 138.15 and a one-week rising support line near 137.15.
In the event of a quick decline, the pair could target the 200-day Simple Moving Average (SMA) level at 134.50. Till we did not advise to sell the position in USD/JPY.

Support and Resistance Level: -
S1 137.75-R1 139.21
S2 136.79-R2 139.71
S3 136.29-R3 140.66


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