USD/JPY: US CPI data will be crucial to see a break of 33-year high at 151.95 – MUFG

USD/JPY traded at a new cycle high around 151.91 on Monday. Economists at MUFG Bank analyze the pair’s outlook ahead of CPI data for October.

Any Dollar strength will likely be most prevalent if option-related resistance at 152.00 gives way

The US CPI data will be crucial on whether USD/JPY breaks back higher and through the high from Monday and through the current cyclical high recorded in last year at 151.95, a 33-year high. 

We think it would take a sharp upside surprise to get markets repricing Fed rate hikes and an upside surprise related to medical services inflation will likely be looked through (the same quirk does not happen in the PCE data).

Any Dollar strength will likely be most prevalent in USD/JPY if option-related resistance at 152.00 gives way.

See – US CPI Preview: Forecasts from seven major banks, still to the high side of the Fed’s target