USD/JPY Hits New Peaks After a Booming US CPI
In the second half of Wednesday’s trading day, the USD/JPY pair shot past ¥154.00, thanks to a surprise uptick in U.S. consumer inflation.
Why the Dollar Is Such a Snob Right Now
- Inflation shock: January’s CPI jumped to 3%, outpacing expectations and whispering to markets that price gains are here to stay.
- Treasury yields strutting: The 10‑year U.S. Treasury yield leapt over 4.6%, making the dollar a juicy pick for yield‑hungry investors.
- Yen’s losing its mojo: Japan’s rates lag behind America’s, so the yen, with all its long‑term debt, feels less enticing.
DXY and the Forex Roller Coaster
The DXY (U.S. Dollar Index) nudged up 0.5% during the session, signalling that the dollar is flaunting strength versus its counterparts. This boost translates directly into a stronger USD/JPY.
Market chatter suggests the Fed will keep tightening, not loosening, as long as inflation shows no slowing signs. Until a major data shock hits, the dollar’s sun‑rise is likely to keep rising.
Bank of Japan’s Tight Spot
Japan’s central bank sits on a knife‑edge. Even if it hints at tightening, the huge yield gap keeps the yen on the back burner for global investors. Should USD/JPY breach ¥155.00, Japanese officials might shout from the sidelines—though the real game‑changer would be any decisive action.
Potential Volatility Ahead
Upcoming U.S. Treasury bond sales and trade policy updates (yes, the old Trump era or whatever) mean the dollar could still wobble. If bond demand drops, yields might skyrocket, sending USD/JPY higher yet again. Meanwhile, any stricter trade stance could reinforce the dollar as a safe haven.
What the Chart Tells Us
The pair’s latest run has broken through the 152.76 level, the 200‑day SMA. Wednesday’s gains topped 1%, but resistance at 154.90 bailed the momentum, folding the price into a 154.50 consolidation zone. A fresh spark might be needed to push the pair higher again.
Bottom Line
Fundamentally, the dollar currently enjoys a sturdy run against the yen, but keep a close watch on any Japanese intervention or a sudden U.S. rate shift if inflation grounds out. Until then, the upward climb for USD/JPY remains the marquee story.
