Chart of the day - USDJPY (31.05.2024)

USDJPY is breaking above the upper limit of a short-term range this morning, returning above 157.00 mark. Data from Japan released during the Asia-Pacific session failed to support Japanese yen, even though it was not too bad. CPI inflation in Japan's Tokyo area accelerated in May while retail sales increased more than expected in April. However, industrial production reading missed expectations. The pair will get the next change to move in the early afternoon, when US data pack for April, including PCE inflation, is released. Economists expected headline and core PCE to stayed unchanged compared to a month ago, so higher-than-expected reading may support USD and fuel further gains on USDJPY.

Japan, Tokyo area CPI inflation for May

• Headline:  2.2% vs 1.8% YoY previously
• Ex-food: 1.9% YoY vs 1.9% YoY expected (1.6% YoY previously)
• Ex-food and energy: 2.2% YoY vs 1.8% YoY previously

 Japan, data for April

• Retail sales: 2.4% YoY vs 1.8% YoY expected (1.1% YoY previously)
• Industrial production: -1.0% YoY vs -6.2% YoY previously
• Industrial production (monthly): -0.1% MoM vs +1.0% MoM expected (+4.4% MoM previously)
• Unemployment rate: 2.6% vs 2.6% expected (2.6% previously)

Taking a look at USDJPY chart at H1 interval, we can see that the pair jumped following release of Japanese data (orange circle), but failed to break above the upper limit of short-term range in the 157.00 area. However, another attempt to break above this zone was made in the early hours of European trading and this time it was successful. Pair broke above 50-hour moving average in the 157.10 area as well. Textbook target of the upside breakout from this range suggests a possibility to a move towards 157.40 zone.

Source: xStation5