The USDJPY has wandered lower in trading today with the pair breaching back below a broken trend line on the hourly chart above. Yesterday, the move to the upside accelerated on the break above that level and dips today did find support against the broken level.
Today, the combination of a sideways market and the rising trend line led to a break. There was some momentum to the downside initially. The post retail sales rally was quickly sold and new lows were made in the last hour so of trading at 138.50.
However, that low is still well short of the 38.2% retracement of the move up from Tuesday low at 138.269. Bullard's comment that he sees an end of year 2022 rate now at 3.75% is also helping to give a bounce to the dollar once again (up from 3.5%). The underside of the broken trend line currently comes in at 138.98. That is close to the natural resistance level at 139.00.
It's Friday. The price is lower on the day. University of Michigan lies ahead which is another key real-time data point for the market and the Fed officials. Come in weaker and we could see a rotation back to the downside. Move higher and the move to the upside may continue. Pay attention to the one year inflation expectations. The Fed is focused on inflation and if expectations become more more entrenched, that would be a problem.
