USD/JPY and a Run at 146 in the Hands of US JOLTs Job Openings

It was a busy start to the Asian session for the USD/JPY pair, with inflation figures for September in focus.

The numbers were Yen positive, with Tokyo inflationary pressures building at the end of Q4. In September, Tokyo’s core annual inflation rate accelerated from 2.6% to 2.8, while the annual inflation rate eased from 2.9% to 2.8%. Economists forecast a core inflation rate of 2.8%.

While core inflation picked up, the latest figures are unlikely to shift the Bank of Japan’s stance on monetary policy. The BoJ stated that it would maintain its current policy stance despite the ongoing inflation overshoot. Tokyo core inflation has now overshot the BoJ’s 2% target for four consecutive months. In May, the core annual inflation rate was 1.9%.

Later today, the US core durable goods orders and August’s JOLTs job openings will also be in the spotlight. Following the market reaction to Monday’s ISM Manufacturing PMI and sub-components, we expect today’s figures to influence alongside FOMC member chatter.

FOMC members Williams, Mester, and Fed Governor Jefferson will deliver speeches today.

USD/JPY Price Action

This morning, the Dollar/Yen was up 0.12% to 144.711.

A mixed start to the day saw the Dollar/Yen fall to an early low of $144.412 before rising to a high of 144.732.

Technical Indicators

The Dollar/Yen will need to avoid the 144.671 pivot to target the First Major Resistance Level (R1) at 145.187 and the Monday high of 145.325.

Following today’s inflation numbers from Japan, the US JOLTs job openings will need to impress to support a bullish US session.

In the case of a breakout session, the Dollar/Yen would likely test the Second Major Resistance Level (R2) at 145.841 and resistance at 146. The Third Major Resistance Level (R3) sits at 147.011.

A fall through the pivot would bring the First Major Support Level (S1) at 144.018 into play. However, barring a dollar meltdown, the Dollar/Yen would likely avoid sub-144 and the Second Major Support Level (S2) at 143.501.

The Third Major Support Level (S3) sits at 142.331.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The Dollar/Yen sits above the 50-day EMA, currently at 144.241. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

Avoiding the 50-day EMA (144.241) would support a breakout from R1 (145.188) to target R2 (145.841) and resistance at 146. However, a fall through the 50-day EMA (144.241) and S1 (144.018) would give the bears a run at S2 (143.501) and the 100-day EMA (143.432). The 200-day EMA sits at 141.643.