- USDJPY is on course for a third successive loss amid cooling inflation, and the next two weeks could see heightened trade tariff fears
The USDJPY currency pair traded downwards in the New York session on Thursday as the dollar faced fresh headwinds. The pair was at 143.58 at the time of writing, staying on course to register the second successive day. Macroeconomic data out of the US signal an underlying weakness in dollar fundamentals, which has merged with renewed trade tariff concern to favour the Japanese yen.
Initial Jobless Claims filed in the week ending June 5 came in at a higher-than-expected 248,000, beating the forecast figure of 242,00. That came on the back of data that showed cooling inflation rate, with the May Consumer Price Index having printed out at 2.4%, missing analysts’ forecast rate of 2.5%. Furthermore, the May Producer Price Index (PPI) reading released on Thursday came in at 3%, below the consensus forecast rate of 3.1%.
News of an impending signing of trade deal between the United States and China has improved the US macroeconomic outlook, adding support to the dollar. However, the celebrations have been disrupted by President Trump’s statement on Wednesday that indicated that the US Government will send letters to its trading partners in the next two weeks informing them of new unilateral tariffs applicable to their exports to the US. That has raised the prospect of another round of a tag of war that could add downward pressure on USDJPY.
USDJPY Prediction
USDJPY pivots at 143.95 and the momentum will likely go downwards if resistance persists at that level. The pair will likely find the first support at 143.36. An extended control by the sellers will break below that level and potentially test 142.87.
On the other hand, breaking above 143.95 will signal the onset of bullish control. That will likely see the first resistance encountered at 144.38. Breaking above that level will invalidate the downside narrative. Also, the resulting momentum could extend gains to test 144.79.
