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The USD/JPY pair dipped to 147.61 on Wednesday as the yen gained ground following softer-than-expected US inflation data.

Key factors influencing USD/JPY movement

Recent developments in global trade also captured market attention. The US and China had earlier agreed to a temporary 90-day tariff reduction, though uncertainty lingers over future trade policy once the agreement expires.

In bilateral discussions, Japanese Prime Minister Shigeru Ishiba stated that Tokyo would reject any provisional trade deal with the US unless it included safeguards for the auto industry. He urged Washington to reconsider its proposed 25% tariff on Japanese car imports.

Domestic data showed Japan’s producer prices rose at an annualised rate of 4.0% in April, down from 4.2% in March – marking the slowest growth since December last year.

The Bank of Japan remains cautious in its monetary policy approach, citing persistent uncertainties in both economic activity and inflation trends.

Meanwhile, demand for the yen as a safe-haven asset remains muted as global markets focus heavily on progress in US trade negotiations with key partners.

Technical analysis: USD/JPY

H4 Chart:

• The pair completed its third upward wave, peaking at 148.62, before entering a corrective phase
• The correction target stands at 146.40, with expectations of a new upward wave toward 150.90 once the pullback concludes
• This outlook is supported by the MACD indicator, where the signal line has exited the histogram zone and points firmly downward

H1 Chart:

• The market has consolidated around 147.50, with a downward breakout extending the correction
• A further decline to 146.78 is anticipated, possibly followed by a retest of 147.50 (from below) before another drop toward 146.40
• A subsequent upward wave targeting 148.62 is expected
• The Stochastic oscillator confirms this scenario, with its signal line below 20 but rising sharply towards 50

Conclusion

The yen’s modest rebound reflects a combination of dollar weakness and cautious optimism in trade talks. However, with the BoJ maintaining a dovish stance and risk sentiment improving, further yen gains may be limited unless safe-haven demand resurges.

USDJPY extends pullback from new multi-week high (148.64) into second consecutive day, as overbought conditions prompted traders to collect profits.

Larger uptrend faced increased headwinds from falling daily Ichimoku cloud (brief penetration into cloud, spanned between 147.87 and 150.56 was short-lived) and also failed to clear Fibo barrier at 148.53 (76.4% of 151.20/139.88).

Bull-trap has been formed here that increased downside pressure, as falling thick cloud continues to weigh on near-term action.

Negative signals are developing on daily chart as bullish momentum is fading, stochastic emerging from overbought territory and south-heading RSI is approaching neutrality zone.

Fresh bears approach significant support at 145.30 (Fibo 38.2% of 139.88/148.64, reinforced by 10DMA), with clear break here to sideline larger bulls and open way for further easing towards 144.26 (50% retracement / daily Kijun-sen).

Near-term bias is expected to remain with bears while the price stays below 55DMA (146.50).

Res: 146.50; 147.67; 147.88; 148.64.
Sup: 145.30; 144.82; 144.26; 143.80.

Yesterday’s inflation data release held no major surprises, as the actual Consumer Price Index (CPI) figures came in close to analysts’ forecasts.

According to Forex Factory:

→ Annual CPI: actual = 2.3%, forecast = 2.4%, previous = 2.4%;

→ Monthly Core CPI: actual = 0.2%, forecast = 0.3%, previous = 0.1%.

Overall, stock indices rose yesterday, but according to media reports, this momentum may begin to slow in the near future:

→ UBS analysts downgraded their rating on US equities from “attractive” to “neutral” following the recovery from early April lows;

→ Goldman Sachs analysts believe that the US stock market rally could stall at current levels. In their view, the S&P 500 (US SPX 500 mini on FXOpen) is likely to reach 5900 over the next three months.

Technical Analysis of the E-Mini S&P 500 Chart

The chart provides more reasons to suggest that the current pace of growth may begin to slow.

Firstly, the index has entered a broad range between 5800 and 6120, where it spent a prolonged period during late 2024 and early 2025. This is a zone (highlighted in purple) where supply and demand previously reached a stable equilibrium — and similar balance could potentially emerge again.

Secondly:

→ the slope of the current upward channel (marked in black) appears excessively steep;

→ the RSI indicator points to a divergence;

→ the psychological level of 6000 may act as resistance.

Given the above, special attention should be paid to the scenario in which the S&P 500 (US SPX 500 mini on FXOpen) forms a short-term correction before the end of the month.

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Asian Session Market Wrap

Asia's main stock index went up, driven by tech companies, as investors waited for earnings reports from big Chinese tech firms this week.

Regional tech stocks rose for a fourth straight day after Nvidia and AMD said they would sell chips to a Saudi AI company for a $10 billion data center project. Meanwhile, US stock futures stayed steady.

China's top tech giant, Tencent, will release earnings on Wednesday, followed by Alibaba on Thursday. These results could show how the two key firms are handling geopolitical challenges and whether Chinese tech stocks might continue their recovery.

Australia's wages grew more than expected in the first quarter, reflecting a tight job market boosted by increased public-sector hiring

The European Open

Heading into the European open, Stock futures signaled declines in European markets and a steady session for Wall Street with the S&P 500 marginally higher.

Sentiment remains relatively stable for now but there is a 90-day deadline hanging over markets which may cast a shadow. Given the flip-flopping we have seen by the Trump administration, one could forgive market participants for not overly committing just yet.

Tech stocks are gaining attention again after U.S. chipmakers Nvidia and AMD announced major AI deals in the Middle East, coinciding with Trump’s visit to Saudi Arabia.

Nvidia’s stock jumped on Tuesday, boosting the company’s value to $3 trillion and CEO Jensen Huang's wealth to $120 billion.

Source: LSEG

On the FX front, the U.S. dollar index stayed steady at 100.87 after its biggest drop in over three weeks. It had risen 1% on Monday, reaching a one-month high, as hopes grew that easing U.S.-China trade tensions could prevent a global recession.

The dollar rose 0.24% to 7.2122 yuan in offshore trading, after hitting a six-month low at 7.1791 yuan on Tuesday.

Meanwhile, the dollar fell 0.41% to 146.89/JPY, continuing Tuesday’s 0.66% decline. On Monday, it saw its biggest jump since March 2020, rising 2.14%. It also slipped 0.1% to 0.8384 Swiss francs.

The euro traded at 1.1191 and the British pound at $1.3307, with little change in either currency pair ahead of the European session.

Currency Strength Chart

Source: OANDA Labs

Commodities remain interesting with Gold continuing to face headwinds following the weekend. Gold trades around $100 off Fridays daily close around the $3324/oz handle with a brief attempt at a recovery fizzling away yesterday. For now, the precious metal may struggle if sentiment continues to improve or if the current status quo remains unchanged.

Brent crude oil prices jumped nearly 2.6% yesterday, hitting their highest level since late April.

There have been growing concerns among US oil companies as Oil prices flirted with the $60 a barrel mark. President Trump had pledged to lower Oil prices to benefit consumers as well as increase US production. However, if oil prices dip significantly it will affect the profitability of US firms. In a way, it appears President Trump may struggle to deliver on both promises moving forward.

The main driver was the threat of more sanctions on Iranian oil exports. The US Treasury imposed sanctions on a group involved in shipping Iranian oil to China, and President Trump mentioned the possibility of stricter sanctions if no nuclear deal with Iran is reached. Trump has often warned about reducing Iran’s oil exports to zero. Although this is unlikely, there’s still potential for a significant decrease, as Iran currently exports around 1.6 million barrels per day.

Later today we will get the OPEC monthly oil report and it should be an interesting one given the desire by OPEC + countries to continue with aggressive supply hikes.

Economic data releases

From a data standpoint, it is not a busy day with limited data release. However, the following events could still stoke volatility while the overarching trade deal narrative remains firmly in play.

• Germany, Spain report final CPI figures for April
• Europe earnings: Burberry Group full year, ABN Amro Bank Q1
• Bank of England Governor Andrew Bailey speaks in Amsterdam
• Fed Bank of New York Q1 report on household debt and credit
• Fed Vice Chair Philip Jefferson speaks on the economic outlook at a virtual conference
• OPEC Monthly Report (Tentative)
• EIA crude oil inventories

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the day - DXY

The US Dollar Index (DXY) rally appears to fizzling out after the index rallied to a 1-month high on Monday.

Yesterday saw a bearish engulfing candle close on the daily timeframe with the index slightly down during Asian trade.

The markets reaction since Monday suggests significant bearish appetite for the US Dollar with yesterday lower that expected inflation print unlikely to help.

The grind higher when looked at in comparison to the decline also suggests that bearish interest remains strong.

If the DXY is to maintain its current uptrend and extend its recovery, a hold above the psychological 100.00 handle may be key.

For now though, immediate support rests at 100.61 and 100.00 before the 99.57 handle comes into focus.

A bullish continuation may bring recent highs around 102.00 back into focus before the 102.16 and 102.64 handle become areas of concern.

US Dollar Index (DXY) Daily Chart, May 14, 2025

Source: TradingView.com (click to enlarge)

GBP/USD is attempting a fresh increase above the 1.3270 resistance. EUR/GBP declined steadily below the 0.8460 and 0.8440 support levels.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is attempting a fresh increase above 1.3250.
• There was a break above a key bearish trend line with resistance at 1.3270 on the hourly chart of GBP/USD at FXOpen.
• EUR/GBP is trading in a bearish zone below the 0.8460 pivot level.
• There was a break above a connecting bearish trend line with resistance near 0.8410 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair declined after it failed to clear the 1.3440 resistance. As mentioned in the previous analysis, the British Pound traded below the 1.3200 support against the US Dollar.

Finally, the pair tested the 1.3140 zone and is currently attempting a fresh increase. The bulls were able to push the pair above the 50-hour simple moving average and 1.3215.

There was a break above a key bearish trend line with resistance at 1.3270. The pair surpassed the 50% Fib retracement level of the downward move from the 1.3402 swing high to the 1.3139 low. It is now showing positive signs above 1.3300.

On the upside, the GBP/USD chart indicates that the pair is facing resistance near 1.3340 and the 76.4% Fib retracement level of the downward move from the 1.3402 swing high to the 1.3139 low.

The next major resistance is near 1.3400. A close above the 1.3400 resistance zone could open the doors for a move toward 1.3440. Any more gains might send GBP/USD toward 1.3500.

On the downside, immediate support is near 1.3270. If there is a downside break below 1.3270, the pair could accelerate lower. The first major support is near the 1.3215 level and the 50-hour simple moving average.

The next key support is seen near 1.3140, below which the pair could test 1.3080. Any more losses could lead the pair toward the 1.3000 support.

EUR/GBP Technical Analysis

On the hourly chart of EUR/GBP at FXOpen, the pair started a fresh decline from well above 0.8500. The Euro traded below the 0.8430 level and tested 0.8400. It is now consolidating losses and trading below the 50-hour simple moving average. However, there was a break above a connecting bearish trend line with resistance near 0.8410.

The pair is now facing resistance near the 23.6% Fib retracement level of the downward move from the 0.8522 swing high to the 0.8399 low at 0.8430.

The next major resistance could be 0.8460. It coincides with the 50% Fib retracement level of the downward move from the 0.8522 swing high to the 0.8399 low. The main resistance is near the 0.8495 zone. A close above the 0.8495 level might accelerate gains. In the stated case, the bulls may perhaps aim for a test of 0.8520. Any more gains might send the pair toward the 0.8550 level.

Immediate support sits near 0.8400. The next major support is near 0.8365. A downside break below the 0.8365 support might call for more downsides. In the stated case, the pair could drop toward the 0.8300 support level.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

BoE MPC member Catherine Mann explained her notable policy shift during an interview with CNBC, revealing why she moved from backing a 50bps rate cut in February to voting for a hold at last week’s meeting.

Mann cited the UK labor market’s resilience as a key factor in her reassessment. While recent data suggest some moderation "a slowing labor market", she argued that "it is not a non-linear adjustment."

Mann also flagged a new risk emerging from tariffs. She warned that rising US tariffs on countries like China could lead to an influx of diverted exports into markets such as the UK. While this could temporarily ease goods prices at the border, she cautioned that domestic retailers may use the opportunity to rebuild profit margins, keeping upward pressure on consumer price inflation rather than alleviating it.

Crucially, Mann emphasized the need to see a broad-based "loss of pricing power" in firms. "I need to see that firms are starting to be much more moderate in setting their prices across a broad range of products," she added. "Goods price inflation is actually going up, not down."

Markets

The market rebound after the weekend US-China trade truce was confronted the with yesterday’s US April inflation data. The potentially less negative impact of the trade war on the US (and global) economy also changed the market assessment on inflation. Especially the combination of resilient activity data and ongoing high inflation data would solidify Powell’s reactive wait-and-see bias. At 0.2% M/M and 2.3% Y/Y for headline CPI (from 2.4%) and 0.2% M/M and 2.8% Y/Y for core (unchanged from March), US inflation was marginally softer than expected. The details showed that some goods prices already tentatively rose as was the case for energy prices (electricity) but this was compensated for by lower food prices and some services prices. Shelter prices still rose 0.3% M/M. Overall the report didn’t bring any decisive guidance on the potential impact of the tariffs going forward. A modest dip in yields immediately after the release was very short-lived. President Trump again used the report to call Fed Chair Powell to cut interest rate immediately. However, markets understood that this report is no reason for the Fed Chair to leave the current approach anytime soon. At the end of the day US yields hardly changed (after the recent rebound) with the 2 and the 5-y down 1.0 bp and the 30-y unchanged. German Bunds still underperformed Treasuries with yields rising between 2.3 bps (2-y) and 4.5 bps (30-y) as markets ponder the scope (and timing) of additional ECB rate cuts in the wake of recent trade developments. A June rate cut is no longer 100% discounted. ECB’s Villeroy indicated that another rate cut is likely by summer. That of course gives some room of maneuver on the timing. In the meantime, US equities remained well supported (S&P 500 +72%). Modest inflation is a supportive. The Nasdaq even outperformed as Trump deals negotiated during his trip in the Middle East supported US tech stocks. The combination of moderate inflation and a continuation of the risk rally this time caused a correction on recent USD gains. DXY eased from 101.7 to close near the 101 big figure. EUR/USD rebounded from the 1.109 area to close near 1.1185. The recent rebound in sterling (against the euro) gradually eased despite in line unemployment date and still solid wage March wage growth (EUR/GBP close 0.841).

Today’s eco data calendar is extremely thin, except for some Fed (Waller, Jefferson) and ECB (Nagel, Holzmann) speakers. Yesterday’s price action at least suggests that the downside in US and probably even more in European yields is well protected. With respect to the latter we also look out to the announced meeting between Ukrainian President Zelensky and (maybe) Vladimir Putin that might take place in Turkey tomorrow. Expectations probably are low. Any positive outcome might further support some kind of European reflation trade. Of course, this remains highly conditional for now. Today we expect more technical consolidation on the risk rally. Even despite yesterday’s correction, we’re not sure that that the dollar rebound has already fully run its course. Some further comeback might still be on the cards.

News & Views

Australian wage growth accelerated from 0.7% Q/Q in Q4 2024 to 0.9% Q/Q in Q1 2025 (vs 0.8% expected), the fastest pace since Q4 2023. Jobs covered by enterprise agreements contributed to over half of all quarterly wage growth. The larger than usual March quarter contribution from enterprise agreement-covered jobs was mainly driven by the new state-based enterprise agreements in the public sector. Annual wage pay picked up from 3.2% to 3.4%. Details showed private sector annual wage growth unchanged at 3.3% while public sector salaries rose by 3.6% Y/Y (up from 2.9%). The Australian Bureau of Statistics publishes its monthly labour market report tomorrow.

Bulgarian parliament speaker Kiselova rejected President Radev’s request for a referendum on euro adaptation saying that it violated Bulgaria’s constitution as well as a range of EU treaties. The politically loaded push came as the country waits the June 4 publication of convergence reports by the EC and the ECB and against the background of a divided political and societal landscape. Interior minister Mitov yesterday labelled the referendum request as “a clear act of sabotage against the introduction of the euro in Bulgaria”.

Daily Pivots: (S1) 195.20; (P) 195.79; (R1) 196.81; More...

Intraday bias in GBP/JPY stays on the upside at this point. Decisive break of 195.95 resistance will suggest that whole choppy decline from 199.79 has completed, and target this resistance next. On the downside, below 194.77 minor support will turn intraday bias neutral again first.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 175.94 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 164.32; (P) 164.77; (R1) 165.41; More...

Intraday bias in EUR/JPY stays mildly on the upside at this point. Current rise from 154.77 should extend to 166.67 resistance. On the downside, below 164.10 minor support will turn intraday bias neutral first. But risk will stay on the upside as long as 161.57 support holds, in case of retreat.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 0.8398; (P) 0.8413; (R1) 0.8422; More...

EUR/GBP's fall from 0.8737 is in progress and intraday bias stays on the downside. Current development suggests that whole rebound from 0.8221 has completed as a corrective move. Further decline should be seen back to 0.8221/8239 support zone. For now, risk will stay on the downside as long as 0.8539 resistance holds, in case of recovery.

In the bigger picture, the extended decline from 0.8737 dampened the original bullish view. While a medium term bottom was in place at 0.8221, price actions from there could be a corrective pattern only. Larger down trend from 0.9267 (2022 high) might still be in progress. Sustained trading below 55 W EMA (now at 0.8438) will turn favor to this bearish case.