USD/JPY Outlook: Dollar Fundamentals Remain Supported Ahead of CPI Release
2026-10-14 01:48:18
On Tuesday (October 13), the US dollar weakened against the Japanese yen during the US trading session, and also weakened against several other currencies. However, oil prices are rebounding, and US Treasury yields have moved away from their lows. Dollar volatility is currently limited, but these factors may help the dollar regain strength ahead of Wednesday's US CPI data release. We maintain a mildly bullish view on the USD/JPY pair, which continues to consolidate around the 200-day moving average. 
Technical Analysis Over the past few trading days, USD/JPY has been trading near its 200-day moving average, showing a lack of downward momentum. The bulls haven't given up, and if the bears break below this level, the pair could see a significant upward move in the coming days. 
(USD/JPY Daily Chart Source: EasyForex) Undoubtedly, a large number of stop-loss orders have accumulated above the recent high of 158.75-159.00. In my view, once these stop-loss orders are triggered, the price is likely to quickly surge to the 160.00 level. Intraday support is around 158.00; looking at the upper and lower shadows of the daily candlestick, 157.00 is a densely traded area; further down, the next support level to watch is 156.00. In summary, despite a slight weakening today, the overall risk for USD/JPY remains skewed to the upside. Focus on US CPI Data As mentioned above, US inflation data is a core event on the macroeconomic agenda, and Wednesday's data may trigger significant short-term volatility in major currency pairs. The market expects core CPI to rise 0.2% month-on-month, corresponding to a year-on-year growth of 2.5%; overall CPI is expected to rebound to 3.6% year-on-year. Market expectations are relatively clear; only a significant surprise in the data will drive a substantial move in the US dollar. If the data largely meets expectations, the initial market reaction is likely to be relatively muted. USD/JPY Outlook: Short-term pullback still supported by buying interest . Ahead of the CPI data release, market expectations of a hawkish Fed policy continue to support the dollar. Meanwhile, positioning data shows the market still favors going long on the dollar and shorting most major currencies, with the euro being particularly prominent. Although dollar-buying activity appears crowded, this alone does not indicate a market reversal. Whether the dollar will begin a new round of gains, pushing USD/JPY back towards 160, remains unclear.
Technical Analysis Over the past few trading days, USD/JPY has been trading near its 200-day moving average, showing a lack of downward momentum. The bulls haven't given up, and if the bears break below this level, the pair could see a significant upward move in the coming days. (USD/JPY Daily Chart Source: EasyForex) Undoubtedly, a large number of stop-loss orders have accumulated above the recent high of 158.75-159.00. In my view, once these stop-loss orders are triggered, the price is likely to quickly surge to the 160.00 level. Intraday support is around 158.00; looking at the upper and lower shadows of the daily candlestick, 157.00 is a densely traded area; further down, the next support level to watch is 156.00. In summary, despite a slight weakening today, the overall risk for USD/JPY remains skewed to the upside. Focus on US CPI Data As mentioned above, US inflation data is a core event on the macroeconomic agenda, and Wednesday's data may trigger significant short-term volatility in major currency pairs. The market expects core CPI to rise 0.2% month-on-month, corresponding to a year-on-year growth of 2.5%; overall CPI is expected to rebound to 3.6% year-on-year. Market expectations are relatively clear; only a significant surprise in the data will drive a substantial move in the US dollar. If the data largely meets expectations, the initial market reaction is likely to be relatively muted. USD/JPY Outlook: Short-term pullback still supported by buying interest . Ahead of the CPI data release, market expectations of a hawkish Fed policy continue to support the dollar. Meanwhile, positioning data shows the market still favors going long on the dollar and shorting most major currencies, with the euro being particularly prominent. Although dollar-buying activity appears crowded, this alone does not indicate a market reversal. Whether the dollar will begin a new round of gains, pushing USD/JPY back towards 160, remains unclear.
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