High inflation is not such a big problem for Japan as it is for, for instance, the US and the UK. Although the sharp jump in the Core CPI in Japan two months ago to 4.1% in annual terms caused alarm, the data published this morning (although it testified to an unusually high level of inflation for Japan) generally reduced the degree of alarm:

→ Core CPI (today): 3.1%: (expected 3.1%).

→ Core CPI (a month ago): 3.1%.

→ Core CPI (a year ago): 0.8%.

As a result of published data on inflation, the yen strengthened in the morning. The demand for the Japanese currency is also facilitated by the following facts:

→ the banking crisis has practically not affected the banks of Japan;

→ oil prices are adjusting after the decision to limit OPEC+ production (oil is an important import product to Japan);

→ disappointing first-quarter financials from some companies in the US. Foreign investors poured almost $12 billion into Japanese equities last week, their largest investment since at least January 2018, according to Reuters.

The daily chart shows that the USDJPY rate is forming a reversal (1) from the upper border of the descending channel A1-A2, as a result of which the price may again test the long-term trend line (2). More frequent attempts to touch this line may indicate that the bears' attempts to break through it are becoming more and more persistent.

This forecast represents FXOpen Companies opinion only, it should not be construed as an offer, invitation or recommendation in respect to FXOpen Companies products and services or as financial advice.

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