USD/JPY: Dollar Chases ¥150.00, Crosses 200-Day Moving Average in Steep Push Higher

All three major simple moving averages are now under the exchange rate. Next resistance sits at ¥150.90, a previous top-turned-sell wall.

💪 Dollar Gets Lift to 2-Month Top

• The USDJPY pair climbed to a two-month high of 149.80 on Friday as currency traders were juggling rate-cut expectations and economic news releases.
• The US dollar has been pushing higher in the past few days, adding pips against a weaker yen in what appears to be an exit of a mid-term consolidation.
• Between early August and current market prices, the dollar-yen has been range-bound and trading sideways, hugging all three big simple moving averages (SMAs). But that’s not the case anymore.

👉 PCE Inflation Points to More Cuts

• The dollar’s fresh jump got the pair out of the range and above the 200-day moving average, which had been sitting at ¥148.50. Next up, if the bulls continue plowing ahead, is the ¥150.90 level as a mid-term resistance.
• But on the flip side, yen bulls and dollar bears might have more in common than they suspect. And the recent inflation data indicated that the outlook for the dollar will likely remain uncertain and even gloomy.
• PCE inflation was released earlier today, showing that prices increased in line with expectations at 2.9% annual growth in August. In other words, the Fed’s rate-cut plans remain intact and traders still eyeball two trims by the end of the year.

🥱 Boring Pair Is Boring

• Technically, that should take away some of the dollar’s appeal. Lower interest rates bring lower yields on fixed-income assets. That threatens to undermine investor confidence in the underlying currency.
• But on the other end is the Bank of Japan, which is still reluctant to raise rates due to economic worries and growth headaches. All while inflation in Japan stays well above the bank’s 2% target. That stubbornness keeps a lid on yen appreciation.
• The back-and-forth has been going on for a while now and that’s why this pair hasn’t been a very good bet for the long-term swing traders. Year to date, the dollar-yen is lower by less than 5%. The EURUSD is up 13% over the same time span and the GBPUSD is up 8%.