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Japanese Consumer Inflation Continues to Rise

1/30/2023 12:05 PM

Against the backdrop of statements by Japanese Finance Minister Shunichi Suzuki, who supported the current "dovish" course of monetary policy, and the negative dynamics of the US dollar, the USD/JPY pair is declining, trading at 129.47.

The Japanese regulator remains the only one among developed countries that keeps the interest rate at a negative level of –0.10%, which does not allow for monetary pressure on inflation, which continues to rise smoothly: the consumer price index in the Tokyo metropolitan area rose from 4.0% to 4.4%, and the core index – from 4.0% to 4.3%, exceeding experts' expectations of 4.2%. These data are key to determining the significance of the country as a whole and will put significant pressure on domestic demand and negatively affect the service sector, leveling the success achieved by the Bank of Japan after the lifting of quarantine restrictions and acting as a catalyst for revising the "ultra-dovish" rhetoric of the department.

The US dollar is moving narrowly, holding around 101.600 points in the USD Index. The currency was largely unaffected by Friday's personal consumption expenditures data, which was in line with analysts' expectations, with the underlying down to 4.4% from 4.7% earlier and a monthly change of 0.3%, comparable to November data, which indicates a reduction in household spending and is a negative signal for the economy.

On the daily chart, the trading instrument is moving within a local downward corridor, approaching the local low of 128.00.

Technical indicators maintain a sell signal: fast EMAs on the Alligator indicator are approaching the signal line, indicating a local correction, and the AO histogram is forming rising bars below the transition level.

Resistance levels: 130.76, 134.50. | Support levels: 128.35, 125.13.

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