The USD/JPY pair registered minor losses after the release of the US Core Personal Consumption Expenditure (PCE) price index, the Fed’s favored measure of inflation. Prices continued their downward trend, albeit at a slower pace, with the pair currently trading at 151.25, down 0.09%.
The US Bureau of Economic Analysis (BEA) revealed a lower-than-anticipated Core PCE of 0.3% MoM for February, easing from the previous month. Annual data also cooled slightly from 2.9% to 2.8%, in line with forecasts. Headline inflation came in at 0.3%, lower than January’s readings, and at 2.5% for the 12 months to February, slightly up from 2.4%. While this data eases some pressure on the Fed, policymakers remain cautious as other inflationary indicators like the CPI and PPI show persistent inflation above the 3% threshold.
Fed Governor Christopher Waller’s hawkish stance earlier this week emphasizes the central bank’s determination to combat inflation. Comments from San Francisco Fed President Mary Daly and Fed Chair Jerome Powell will be scrutinized for further clues on the policy outlook.
Despite signs of disinflation, the tightening labor market evidenced by four consecutive weeks of declining jobless claims could contribute to increased spending and potentially fuel further price increases. Wells Fargo analysts highlight this trend, noting that consumer spending hasn’t waned as expected, hindering efforts to curb inflation.
The daily chart depicts USD/JPY consolidation within the 151.15/151.60 range, reflecting market indecision amid warnings of intervention from Japanese authorities. A sustained push above 152.00 could pave the way towards 153.00. Alternatively, failure to hold above 152.00 and 151.00 could trigger a decline towards the Tenkan-Sen support at 150.49, followed by the Senkou Span A at 149.86.
