FxWirePro: USD/JPY consolidates previous session's gains, bias remains bullish

Chart - Courtesy Trading View 

USD/JPY was trading 0.06% lower on the day at 137.34 at around 07:10 GMT.

Record high print of the US one-year inflation expectations, as per the NY Fed’s survey of one-year-ahead consumer inflation expectations support dollar.

The NY Fed’s inflation precursor jumped to 6.8% in June, versus 6.6% prior. Focus now on US inflation data due later this week.

The consensus for the US Consumer Price Index (CPI) is higher at 8.7%. While the core CPI is seen lower at 5.7% than the prior print of 6%.

A significant fall in the core CPI will indicate that the price pressures are mostly guided by volatile oil and food prices.

This will strengthen the case for a bumper rate hike announcement by the Fed after a 75 basis points (bps) rate hike in June.

Also, Shanghai’s first coronavirus Omicron sub-variant BA-5 case escalated virus woes, keeping market sentiment depressed, supporting the dollar safe-haven status.

Support levels - 136.53 (5-DMA), 135.59 (20-DMA), 135.28 (21-EMA)

Resistance levels - 137.88 (Upper BB), 138, 139.91 (Sept 1998 high)

Summary: Technical bias for the pair remains bullish. GMMA indicator shows major and minor trend are bullish. Momentum is bullish and volatility is rising, could drag the pair higher. Scope for test of fresh multi-year highs.