Fed Chair Jerome Powell To Deliver Remarks Image. Image source: - © 123RF.com
The U.S. dollar surged early in today’s trading session following fresh data on inflation, as market participants recalibrated their expectations for future rate hikes. For a deeper dive into the greenback’s performance, check out our latest EURUSD outlook.
This morning, the U.S. Department of Labor reported higher-than-expected Consumer Price Index (CPI) figures, fueling speculation that the Federal Reserve might need to maintain its aggressive monetary tightening policy. Elevated inflation figures, coupled with ongoing uncertainty in the Middle East, have contributed to further demand for the dollar as a safe-haven asset.
As seen in the 4-hour chart, the USDJPY is attempting to breach the key resistance level at 148.200, a zone aligned with the 50 per cent Fibonacci retracement. The relative strength in the pair is supported by the MACD indicator showing bullish momentum.
Should USDJPY manage to break through this level, the next target for bulls would be the psychological threshold of 149.00. Conversely, failure to sustain this rally could see a retreat towards the 38.2 per cent Fibonacci level around 147.500, where strong support is expected due to the convergence of key moving averages.
Geopolitical Risks Weigh on Markets
Investor sentiment remains fragile amid heightened tensions in the Gaza Strip and renewed concerns over global energy supply chains. A further escalation in the conflict could drive oil prices higher, compounding inflationary pressures.
Fed Chair Jerome Powell is set to deliver remarks later today, which could offer more insights into the central bank’s outlook on inflation and interest rates. Market participants are closely watching for any signals of potential policy adjustments, as the global economy grapples with both geopolitical risks and rising price levels.
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