- USD/JPY initially slipped but firmed after U.S. core PCE met expectations, with technical action hinting at another bullish rebound.
- Support levels remain intact, and the pair may consolidate while awaiting the upcoming FOMC decision and press conference.
The US dollar fell a bit against the Japanese yen in early trading on a Friday, but we have now reacted to the core PC numbers that came out as anticipated in the United States. And that, of course, makes the US dollar firm up a little bit because I think some people were expecting bad news.
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At this point, we have to pay close attention to Japanese yields in the bond markets and the JGB market due to the fact that rising interest rates could signal a problem. It can be the death of the carry trade, but I don't think that gets out of control. At this point, we're in the process of forming another hammer as we had on Thursday. So I think a bounce here does make a certain amount of sense from a technical analysis standpoint, and it could send this market back to the 158 level.
50 Day EMA
The 50-day EMA sits in the 153.50 region, and the 153 yen level underneath is a significant support level, all things being equal. This is a market that I think will continue to find buying opportunities based on value, and the Wednesday session of next week also features the interest rate decision; people will be watching that very closely. But I think more importantly, what they will pay attention to is the press conference and statement.
If the Federal Reserve looks like it's going to be very hesitant to cut rapidly, then that should send the US dollar higher. So, the next couple of days might be about hanging around in this area, just simply killing time waiting for that information. But right now, we're still in an uptrend. That hasn't changed. It looks like we are trying to push to the upside. So, I like it.
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