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As of Wednesday, the USD/JPY pair was trading around 157.88, up 0.13% for the day. The US dollar continues to strengthen amid renewed "hawkish" sentiment about the Federal Reserve's monetary policy.
The dollar remains close to its recent highs following the US consumer price index data release on Tuesday, which beat market expectations. In April, annual inflation in the US rose by 3.8%, surpassing both market forecasts (3.7%) and the previous period's figure (3.3%). This information reinforces expectations that the Federal Reserve may maintain elevated rates for an extended period.
Recently released data also confirm the presence of inflationary pressure in the United States. In April, the Producer Price Index rose by 6% year-on-year, again exceeding market expectations (4.9%). The core index reached 5.2%. Rising energy prices, spurred by geopolitical tensions in the Middle East, continue to heighten concerns about global inflation.
According to the CME FedWatch tool, the probability of the Fed raising rates at least once before the end of the year has significantly increased following the US inflation data. This turn of events is contributing to rising yields on US Treasury bonds and strengthening the dollar against the Japanese yen.
Upcoming important events for markets include a meeting between US President Donald Trump and Chinese President Xi Jinping, scheduled for this week in Beijing. Investors need to closely monitor statements on trade and geopolitical tensions, as the situation surrounding Iran and the Strait of Hormuz continues to put pressure on markets, raising risk levels.
Regarding the situation in Japan, the yen is partially recovering from its recent losses amid expectations of further monetary policy tightening by the Bank of Japan. According to the "Summary of Opinions" from the April meeting of the central bank, several board members are considering raising interest rates at upcoming meetings due to inflationary risks posed by rising oil prices.
The Organisation for Economic Co-operation and Development (OECD) has also stated that the Bank of Japan could raise the key interest rate to 2% by the end of 2027, while simultaneously urging the Japanese government to strengthen budgetary discipline.
In the table below, you can see the percentage changes in the value of the Japanese yen against major currencies on Wednesday, with the yen strengthening most against the New Zealand dollar.
From a technical perspective, despite the dollar's rise in the pair, it remains in a bearish zone, as confirmed by negative oscillators and the fact that prices have not yet overcome the 20-day SMA, which would give the bulls the strength to rise. However, the 200-day SMA continues to rise, confirming the overall long-term trend.*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.
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