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Title: USD/JPY displays exhaustion signals around 133.50, US Michigan CSI eyed

August 12, 2022 12:19 AM ET

By: AnalysisWatch

The USD/JPY pair has declined marginally after an intraday high of 133.50. On a broader level, the asset has shown a pullback movement after a vertical decline on Wednesday. The pullback move is likely to be exhausted as there is no potential trigger.

The US Dollar Index (DXY) is gradually declining but is able to hold above the crucial hurdle of 105.00.

After a massive decline due to the weaker US Consumer Price Index (CPI) release, investors are now refocusing on the likely hawkish stance of the Federal Reserve (Fed) at the September monetary policy meeting.

Markets welcomed the downward movement in the U.S. Consumer Price Index (CPI), which landed at 8.5%, below the expected 8.7% and the previous release of 9.1%. A one-time slowdown in U.S. inflation is not enough to turn things around, as price pressures remain far from desired levels, which is why the Fed will continue its course of raising interest rates. However, the amount of hawkish guidance will be abruptly reduced.

In today's session, all the attention will be on the US Michigan Consumer Sentiment Index (CSI). The data is likely to improve to 52.2 from the previous reading of 51.5.

In Tokyo, the ongoing cabinet reshuffle is expected to lead to a dramatic change in the Japanese yen's situation more broadly. Japan's Finance Minister, Shunichi Suzuki, said that Japan's financial situation is still serious. He added that "it is crucial to continue to respond to COVID and inflation."

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