【Yen Weakness Pauses, but Dollar May Regain Strength on PCE Data】
— A market caught between position adjustments and pre-event caution —
■ USD/JPY Enters a Range Amid Volatility – Direction Hinges on U.S. PCE
In yesterday’s Tokyo session, USD/JPY dipped to 150.06 but later surged to 151.15 during the NY afternoon. The rebound was largely driven by short-covering of previously built-up yen long positions.
This morning in Tokyo, the Tokyo CPI came in stronger than expected, leading to a brief wave of yen buying and a dip toward the 150.70s. However, as the Tokyo fix approached, yen selling resumed, pushing USD/JPY to a new high of 151.21.
Following that, the pair dropped again to 150.71, reflecting the ongoing choppy and nervous price action. The Nikkei's sharp decline (-679.64 points) also prompted some risk-off yen buying, capping upside attempts around the 151 level. For now, the pair appears stuck in a range awaiting participation from European traders.
■ All Eyes on Tonight’s U.S. Core PCE – An Upside Surprise Could Fuel Fresh Dollar Buying
the U.S. Core PCE Deflator—a key inflation gauge closely watched by the Fed—will be released.
Although recent CPI and PPI readings have been soft, expectations for PCE are slightly more upbeat.
If the figure beats estimates, it could dampen rate-cut expectations and trigger renewed USD strength.
→ This makes the post-window a crucial moment for short-term traders, particularly for USD/JPY and other USD pairs.
■ EUR/USD & EUR/JPY Trapped Between Risk-Off Flows and Dollar Pressure
EUR/USD slipped to the 1.0780s during Tokyo hours as risk-off yen flows and dollar strength clashed, resulting in subdued, range-bound price action with a downward bias.
EUR/JPY also dropped from above 163.10 to the 162.60s following yen buying around the Tokyo fix. The pair remains under pressure, though U.S. equity futures have returned to positive territory, suggesting a potential EUR/JPY rebound during the European and U.S. sessions if risk appetite picks up.
■ Strategy Outlook: Position Adjustment into PCE, Ready to Ride Momentum After the Data
- USD/JPY: Watch the 150.50–151.30 range pre-PCE. A strong PCE could lead to a test of 151.50+, while a soft reading opens the door to sub-150.00.
- EUR/USD: Caution warranted for short-covering above 1.0780. A break lower would target the 1.07 handle.
- EUR/JPY: Monitoring whether the pair can stabilize in the high 162s. If U.S. equities hold gains, a return to the 163s is possible.
