USD/JPY Hits New 34-Year High on Sticky US Inflation, Intervention Risk Remains
USD/JPY surged to a new 34-year peak above 153.00 following the release of US Producer Price Index (PPI) data, fueling US Dollar (USD) strength. Despite warnings of intervention from Japanese authorities to curb excessive Yen (JPY) weakness, the pair remains elevated.
Sticky US Inflation: Implications for USD and Fed Outlook
The recent CPI and PPI reports indicate persistent US inflation, putting pressure on the Federal Reserve. This strengthens the US Dollar, with the Dollar Index (DXY) approaching its November 2023 high. While PPI was softer than CPI, it still exceeded expectations.
Rising US Treasury yields also support the USD, further boosting its appeal.
Fed Officials on Inflation, Uncertainty
Recent statements from Fed officials reinforce a hawkish outlook. New York Fed President John Williams expressed disappointment with inflation data and uncertainty about the economic outlook. Richmond Fed President Thomas Barkin questioned whether the Fed is witnessing the beginning of a shift within the disinflation dynamic.
Japanese Authorities Signal Intervention Readiness
Japanese Finance Minister Suzuki reiterated the potential for intervention to address excessive Yen volatility, though concrete action remains uncertain.
Technical Outlook: USD/JPY Eyes Further Upside
Breaking the 153.00 resistance opens the door for a test of the June 1990 monthly high at 155.78, potentially leading to a challenge of the April 1990 pivot high at 160.32. However, intervention risk could trigger a sharp correction toward key support levels, including the Tenkan-Sen at 152.05, Senkou Span A at 150.97, Kijun-Sen at 149.89, and Senkou Span B at 149.59.