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Tokyo's core CPI (excluding fresh food) accelerated to 3.6% yoy in May, up from 3.4% yoy and above market expectations of 3.5% yoy, marking the fastest pace since January 2023. This marks the third consecutive year that core inflation has exceeded the Bank of Japan’s 2% target.

While headline CPI ticked down slightly from 3.5% yoy to 3.4% yoy, the underlying core-core measure (excluding food and energy) also edged up fro 2.0% yoy to 2.1% yoy, suggesting broad-based inflation persistence.

The surge in non-fresh food prices, up 6.9% yoy, remains a dominant driver—highlighted by a staggering 93.2% yoy jump in rice prices.

Another notable development is the uptick in services inflation, which climbed to 2.2% yoy from 2.0% yoy , indicating that businesses are beginning to pass on higher labor costs.

Dallas Fed President Lorie Logan said overnight that with inflation "trending gradually back to target", the labor market "holding strong", and risks to Fed’s dual mandate are "roughly balanced.

Speaking at an event, Logan emphasized that "monetary policy is in a good place", and there is no immediate need for a policy shift.

Logan also highlighted the potential impact of fiscal policy and regulatory changes, noting they could stimulate investment and consumer demand, while elevated economic uncertainty or financial volatility might dampen activity.

San Francisco Fed President Mary Daly, in a Reuters interview, emphasized that above-target inflation remains her "focus" while the labor market is in "solid shape".

With inflation still running above the Fed's 2% target and uncertainty around the pace of its decline, Daly said it's appropriate for monetary policy to remain in a “modestly or moderately restrictive” stance to guide inflation back to target.

Daly added that she's closely watching for any signs of labor market weakening but hasn’t observed such signals yet. At the same time, she remains attentive to whether inflation continues to gradually ease or risks becoming sticky or re-accelerating.

BoE Governor Andrew Bailey emphasized the need for a “gradual and careful” approach to future interest rate cuts in light of lingering global trade uncertainty and its impact on domestic inflation.

His comments follow last week’s stronger-than-expected inflation data, which showed UK CPI jumping to 3.5% in April from 2.6%. Bailey noted it remains unclear how much of the increase is due to seasonal factors, and said the BoE will closely examine the next set of inflation data ahead of its June policy decision.

Bailey acknowledged that while core inflation is "gradually grinding down", the pace of improvement remains sluggish. He also highlighted a renewed rise in food price inflation, which—although not unique to the UK—has a significant influence on public inflation perceptions.

Key Highlights

• USD/JPY started a fresh decline and traded below the 144.00 level.
• It traded above a connecting bearish trend line with resistance at 143.05 on the 4-hour chart.
• EUR/USD is rising and might clear the 1.1420 resistance zone.
• GBP/USD is holding gains and could aim for a move above the 1.3600 resistance.

USD/JPY Technical Analysis

The US Dollar started a recovery wave from the 142.20 zone against the Japanese Yen. USD/JPY climbed above the 143.00 and 143.50 levels.

Looking at the 4-hour chart, the pair traded above a connecting bearish trend line with resistance at 143.05. It even climbed above the 146.00 level before the bears appeared. A high was formed at 146.23 and the price started a fresh decline.

There was a move below the 144.00 support, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour).

On the upside, the pair could face resistance near the 144.20 level. The next key resistance sits near the 144.50 level. The first major resistance sits at 145.00. A close above the 145.00 level could set the pace for another increase.

In the stated case, the pair could even clear the 146.00 resistance. The next major stop for the bulls could be near the 147.80 resistance.

On the downside, immediate support sits near the 143.00 level. The next key support sits near 142.50. Any more losses could send the pair toward the 141.20 pivot level in the near term. The main support could be near 140.00.

Looking at EUR/USD, the pair started another increase, and the bulls could now aim for a move above the 1.1420 resistance.

Upcoming Economic Events:

• US Personal Income for April 2025 (MoM) - Forecast +0.4%, versus +0.2% previous.
• US Core Personal Consumption Expenditure for April 2025 (MoM) - Forecast +0.1%, versus -0.1% previous.

The short-term Elliott Wave analysis for the Dollar Index (DXY) indicates that the cycle from the January 13, 2025 high is unfolding as an impulse pattern, characterized by a five-wave structure moving in the direction of the larger trend. The decline from the January 13, 2025 high began with wave (1), which concluded at 106.96. This was followed by a corrective rally in wave (2), peaking at 109.88. The Index then resumed its downward trajectory in wave (3), reaching 97.92, before a corrective wave (4) rally ended at 101.99, as illustrated in the 1-hour chart below.

Currently, wave (5) is in progress, unfolding as another impulse in a lesser degree. From the wave (4) high, wave (i) concluded at 100.27, followed by a corrective wave (ii) rally ending at 101.259. The Index continued lower in wave (iii) to 99.33, with a subsequent wave (iv) rally peaking at 100.118. The final leg, wave (v), completed at 98.69, finalizing wave ((i)). The corrective wave ((ii)) unfolded as a double three Elliott Wave structure, with wave (w) reaching 99.87. Index then pullback in wave (x) to 99.48, before concluding wave (y) at 100.54. The Index has now turned lower in wave ((iii)). In the near term, as long as the pivot at 101.99 remains intact, the Dollar Index should extend its decline, potentially reaching new lows as the impulse wave continues.

Dollar Index (DXY) 60-Minute Elliott Wave Technical Chart

DXY Elliott Wave Technical Video

https://www.youtube.com/watch?v=A3dlHNEuO4A

US Indices continued their recovery throughout May with another decent start to the trading week. The Nasdaq 100 is up 2.15% since Friday’s close. They are up through broadly unchanged on the day.

Sentiment for this trading week has been broadly positive throughout the globe. Even as US cash markets were closed on Monday for Memorial Day, Equity Futures posted a rise without much retracement.

A swift move up was made in the index after Nvidia beat high expectations on its earnings after the session close with an EPS coming at $0.96 vs $0.93 expected. Revenues came in at $44.1B vs $43.3B expected.

More news came in with the "Taco Trump" headlines, as President Trump's infamous trade tariff policies got denied by the US Federal Court, having deemed that he "overstepped his authority" on his import taxes plan. Markets rallied further before retracing back to yesterday's close.

Let's dive into a multi-timeframe technical analysis review of the NQ.

Nasdaq 100 Technical Analysis

Daily Timeframe

Nasdaq 100 Daily Chart, 2024 to May 28 2025. Source: TradingView

2025 has been volatile for all US Indices to say the least - as a matter of fact, it has been the same around the globe.

The Nasdaq has led on the way up, with Trump’s erratic policy fears abated throughout the past two months. The recovery has been stellar, as we are now largely above the MA 200 and a bit shy of 3% from the all-time highs.

The NQ is up more than 30% from its 4th of April Lows, marked at 16,335.

4H Timeframe

Nasdaq 100 4H Chart, May 28 2025. Source: TradingView

NQ has been in an upwards channel since April 20.

Momentum has been decent, with the MA 50 underpinning the consistent rise.
However, after Moody's downgrade on the US Credit Rating on May 16th, US Indices went through a 3.70% correction, which calmed the rally.

The Nasdaq has to break above 21,800 to pursue it's rise towards the all-time highs.

The MA 50 is showing immediate support, currently at 21,243.
Further support at the lows of the channel coincide with the 21,000 psychological level.

1H Timeframe

Nasdaq 100 1H Chart, May 28 2025. Source: TradingView

NQ has formed a range after last Friday's lows. Prices have since retraced back up, made an extensive move then gave it back in today's afternoon session. Momentum has since flattened.

The MA 200 is coinciding with the first support level, though being flat, confirms a flattening of momentum on the shorter timeframes.

Resistance Levels:

• 21,500 (immediate resistance)
• 21,700 to 21,730 - Fibonacci Extension 1.382
• 22,000 - Psychological Level + 1.618 Fib Extension Confluence

Support Levels:

• 21,245 (MA 200 + Support confluence)
• 21,035
• 20,660 (Friday 23 Pivot)

Safe Trades!

EURCAD: ⬆️ Buy

•  EURCAD reversed from the support zone
• Likely to rise to resistance level 1.5755

EURCAD currency pair recently reversed up from the support zone between the support level 1.5550 and the support trendline of the daily Triangle from March.

The support level 1.5550 was further strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from February.

EURCAD currency pair can be expected to rise to the next resistance level 1.5755 (top of the previous impulse wave i).

GBPJPY: ⬇️ Sell

• GBPJPY reversed from the key resistance level 196.00
•  Likely to fall to support level 193.00

GBPJPY currency pair recently reversed down from the key resistance level 196.00(which has been reversing the price from March) intersecting with the upper daily Bollinger Band.

The downward reversal from this resistance level 196.00 created the daily Japanese candlesticks reversal pattern Shooting Star.

Given the strength of the resistance level 196.00 and the bearish divergence on the daily Stochastic, GBPJPY currency pair can be expected to fall to the next support level 193.00.

Bitcoin: ⬇️ Sell

•  Bitcoin broke daily up channel
• Likely to fall to support level 105,000.00

Bitcoin cryptocurrency recently broke the support trendline of the sharp daily up channel from the start of April intersecting with the 50% Fibonacci correction of the upward impulse from the middle of May.

The breakout of this up channel stopped the previous impulse wave 5 of the extended upward impulse wave (3) from April.

Bitcoin cryptocurrency can be expected to fall to the next support level 105,000.00, the breakout of which can lead to further losses toward 102150,00 (low of the previous minor correction 4).