USD/JPY Price Analysis: Retraces from YTD highs to 115.80s post-US CPI release

• The USD/JPY rallied towards 116.33, but USD bulls failed to sustain the rally, eases to high 115.00s.
• US Treasury yields advance, but the greenback bucks the trend, as it falls 0.10% during the day.
• USD/JPY keeps upward biased, confirmed by the upbreak of a month-old trendline.

Following the US inflation report that showed that prices rose by 7.5% y/y in January, the USD/JPY advances 0.31% in the North American session. At the time of writing, the USD/JPY is trading at 115.86.

The financial market mood dampened as the New York session progressed. US equity indices are recording losses after the US Labor Department noted that the Consumer Price Index (CPI) increased to levels last seen in August 1982. The core CPI reading, which excludes volatile items like food and energy,  expanded above the 6% threshold (y/y), a tenth higher of expectations.

The US Dollar Index, a gauge of the greenback’s performance against a basket of six currencies, edges lower 0.10%, sitting at 95.40, failing to track the rise of US Treasuries, led by the 10-year benchmark note, sitting at 2.012%, gaining seven basis points.

USD/JPY Price Forecasts: Technical outlook

The USD/JPY keeps the upward bias intact. The upbreak of a one-month-old trendline accelerated the move towards 116.00, which was broken after the release of US CPI, though it fell short of piercing the YTD high at 116.35. 

As USD bulls take a breather, after a steeper trip over 116.00, the USD/JPY sits comfortably above November 24, 2021, daily high at 115.52. That said, the USD/JPY first resistance would be 116.0. Breach of the latter would expose the YTD high at 116.35, followed by a challenge of a 24-month-old downslope trendline around 117.00. A clear break of that ceiling level would pave the way towards January 2017 swing high at 118.61.