Will Inflation Data Fuel a USD/JPY Breakout?
12 March 2025
Today’s inflation data in the US will likely determine the next major move for the American dollar. One of the key pairs to watch is USD/JPY, which is attempting a modest recovery after reaching new long-term lows earlier this week. However, despite the recent bounce, the pair remains in a downtrend, and key resistance levels stand in the way of a sustainable upside move.
From a technical perspective, two critical zones are shaping the near-term outlook. The blue resistance zone marks a strong supply area that previously acted as support but was broken earlier this month. The second barrier is the black mid-term downtrend line, which has consistently pushed the price lower since the start of February. Both levels will be crucial in determining whether the current bounce can extend further.
How to Trade This Setup?
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Bullish Scenario: If USD/JPY breaks above both the blue resistance and the black trendline, it would indicate that buyers are regaining control. A daily close above these levels would open the way for a rally towards the green downtrend line, which marks a stronger long-term resistance zone.
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Bearish Scenario: If the price fails to break above resistance and forms a bearish daily candle, it would confirm that sellers are still in control. A negative reaction to the CPI data could lead to another sharp drop, in line with the prevailing long-term downtrend.