Source: PaxForex Premium Analytics Portal, Fundamental Insight
Japanese Foreign Reserves for April came in at $1,322.2B. Forex traders can compare this to Japanese Foreign Reserves for March, reported at $1,356.1B. The Preliminary Japanese Leading Index for March came in at 101.0, and the Preliminary Japanese Coincident Index at 97.0. Forex traders can compare this to the Japanese Leading Index for February, reported at 100.1, and the Japanese Coincident Index at 96.8.
The US CPI for April is predicted to rise 0.2% monthly and 8.1% annualized. Forex traders can compare this to the US CPI for March, which increased 1.2% monthly and 8.5% annualized. The US Core CPI for April is predicted to expand 0.4% monthly and 6.0% annualized. Forex traders can compare this to the US Core CPI for March, which rose 0.3% monthly and 6.5% annualized.
US Real Average Hourly Earnings for April are predicted to decrease 0.6% monthly. Forex traders can compare this to US Real Average Hourly Earnings for March, which dropped 1.1% monthly.
US Crude Oil Inventories for the week ending May 6th are predicted at -0.457M. Traders can compare this to US Crude Oil Inventories for the week ending April 29th, reported at 1.302M. US Gasoline Inventories for the week ending May 6th are predicted at -1.574M and US Distillate Stocks at -1.312M. Forex traders can compare this to US Gasoline Inventories for the week ending April 29th, reported at 2.230M, and US Distillate Stocks at -2.344M.
Today’s inflation data out of the US is expected to provide a market catalyst, especially if the CPI clocks in above expectations. Chinese inflation came in above forecast, with the CPI and the PPI for April accelerating, while economists predicted a slowdown from the red-hot pace printed in March. Supply chain disruptions keep upside pressure on global inflation, and central banks are behind the curve. It will take several months for the effects of interest rate increases to filter through the financial system, allowing inflation to accelerate as global economic indicators show signs of a slowdown. Many hope the economy will avoid a recession, but the alternative, years of stagflation, will cause more long-term damage.
The forecast for the USD/JPY remains bearish, but volatility is likely to increase as bulls and bears fight for control at its horizontal resistance area. This currency pair shows signs of exhaustion, and the Senkou Span B of the Ichimoku Kinko Hyo Cloud turned sideways, initiating the early phase of a likely correction. The Kijun-sen and the Tenkan-sen maintain their uptrend, but the CCI formed a massive negative divergence in extreme overbought territory and completed a breakdown below 100. Traders should monitor this technical indicator for a move below zero, triggering a sell-off. Can bears overpower bulls and force the USD/JPY into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the USDJPY remain inside the or breakdown below the 129.800 to 131.350 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 130.350
- Take Profit Zone: 125.100 – 126.300
- Stop Loss Level: 132.000
Should price action for the USDJPY breakout above 131.350, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 132.000
- Take Profit Zone: 133.500 – 134.500
- Stop Loss Level: 131.350
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