🗞️ Will USD strength and JPY weakness continue? U.S. GDP and PCE are the pivot

🗞️ Will USD strength and JPY weakness continue? U.S. GDP and PCE are the pivot

🎯 Today’s focus

Confirm whether the USD-up / JPY-down trend can hold via the advance U.S. GDP and PCE inflation data.
The week has been led by strong USD and weak JPY. A pre-weekend pullback is possible, but U.S. top-tier data should set the tone.

💴 USD/JPY: from the 152s to the 155s

• Start of week: 152 handle

• Today: trading in the 155 handle

That’s roughly a 3-yen rise this week.

Meanwhile:

• EUR/USD softened from the high 1.18s to the mid-1.17s

• EUR/JPY was choppy: dipped below 181 at one point, then rebounded back into the 183s

🇺🇸 What’s driving USD strength

• FOMC minutes reaffirmed a hawkish stance

• Fed speakers also hinted at higher-for-longer

• U.S. data has generally come in firm

➡️ The market has re-priced the idea of rates staying high for longer.

📊 Key U.S. releases tonight

🏛️ Real GDP (Q4 advance)

• Forecast: +2.8% annualized

• Prior: +4.4%

➡️ A slowdown is expected, mainly due to cooling consumption.

💵 PCE Price Index (Dec)

• MoM: +0.3%

• YoY: +2.8%

• Core YoY: +2.9%

➡️ Inflation is expected to remain sticky.

Slower growth vs. persistent inflation — that’s the tug-of-war.

🌍 Geopolitics

Tensions between the U.S. and Iran remain elevated.

• Oil and gold are higher

• Markets remain in cautious mode

Safe-haven demand + renewed inflation concerns continue to support the USD.

🇯🇵 Japan-side factors

• Expectations for “Takaichi Cabinet 2.0” and more aggressive fiscal policy

• After Japan’s GDP/CPI, expectations for an early BoJ hike have eased

➡️ Baseline bias remains JPY-weak, though geopolitical headlines can create sudden swings.

🇬🇧 London: GBP supported by strong UK PMI

UK flash PMI (Feb)

• Manufacturing: 52.0 (above forecasts)

• Services: 53.9 (above forecasts)

Expansion continues, lifting GBP:

• GBP/USD: 1.3479

• GBP/JPY: 209.51

• EUR/GBP: down to 0.8730

🧭 Scenarios to watch

1. GDP weak + PCE strong → inflation dominates → USD buying persists

2. GDP weak + PCE weak → rate-cut bets revive → USD pullback

3. Both strong → USD extends higher

📌 Wrap-up

• USD strength / JPY weakness remains the week’s theme

• A pre-weekend adjustment is possible

• U.S. GDP + PCE should decide whether the move extends or fades

Tonight is the pivot: USD can accelerate — or the market shifts into weekend consolidation.