Market Flat Ahead of US Inflation Data

Major currency pairs — particularly GBP/USD and USD/JPY — are showing sideways movement following Friday’s mixed US labour market data. While non-farm payrolls rose to 139,000, above the forecast of 126,000, weaker industrial employment (–8,000) and a steady unemployment rate of 4.2% dampened market response. A 0.4% increase in average hourly earnings also failed to give the dollar a strong push, maintaining uncertainty over the Federal Reserve’s next steps.

Today, investors will focus on the release of US Consumer Price Index (CPI) data for May. Core CPI is forecast to rise by 2.5%. The report may significantly affect the short-term direction of the dollar and trigger increased volatility in major currency pairs.

Technical Analysis of USD/JPY

The USD/JPY pair is holding around 144.90, reflecting a neutral market sentiment ahead of a block of key US macroeconomic data. The lack of fresh catalysts from the Japanese economy is contributing to the pair’s consolidation near current levels.

Technical analysis of USD/JPY suggests potential growth towards the 146.20–145.40 zone, as a Stick Sandwich candlestick formation has appeared on the daily timeframe. A clear drop below 144.00 would invalidate the scenario of a bullish correction.

Key events that may affect USD/JPY pricing:

• Today at 15:30 (GMT+3): US Core CPI;
• Today at 17:30 (GMT+3): US Crude Oil Inventories;
• Today at 21:00 (GMT+3): US Federal Budget Statement;
• Tomorrow at 02:50 (GMT+3): Japan’s BSI Large Manufacturing Conditions Index.

Technical Analysis of GBP/USD

The GBP/USD pair is trading around 1.3480, remaining in a tight range ahead of tomorrow’s UK GDP release. Market participants are taking a wait-and-see approach, assessing the outlook for the British economy in light of the Bank of England’s current monetary stance.

Technical analysis indicates a possible retest of a key support level near 1.3400. A reversal pattern known as the "Tower" has formed on the daily timeframe after the pair reached a new high for May.

Key events that may influence GBP/USD:

• Tomorrow at 09:00 (GMT+3): UK Gross Domestic Product (GDP);
• Tomorrow at 09:00 (GMT+3): UK Manufacturing Production;
• Tomorrow at 15:30 (GMT+3): US Producer Price Index (PPI).

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