USD/JPY Price analysis: PCE inflation and resilient US data reinforce USD strength

• PCE inflation confirms persistent price pressure, supporting a “higher-for-longer” Fed stance.
• Strong consumer spending signals economic resilience.
• Falling US yields narrow the rate differential, weighing on USD/JPY early in the American session.

The USD/JPY pair trades firm near the 158.90 handle on April 9, as today’s United States (US) data, particularly the Personal Consumption Expenditures (PCE) report, reinforced the “higher-for-longer” narrative around Federal Reserve (Fed) policy. This is keeping the US Dollar (USD) well supported against the Japanese Yen (JPY).

Fresh data showed that the Fed’s preferred inflation gauge remains stubbornly elevated. Headline PCE rose 0.4% MoM, while core PCE also increased 0.4%, marking a third consecutive strong monthly gain. On an annual basis, core inflation stands at 3.0%, still clearly above the Fed’s 2% target. At the same time, consumer spending jumped 0.5%, highlighting continued demand resilience, although largely driven by higher prices rather than real growth.

On another note, Initial Jobless Claims rose slightly to 219K but remained historically low, signaling a still-solid labor market. Growth concerns still linger, with the US Gross Domestic Product (GDP) revised lower but not enough to shift Fed expectations toward easing

Short-term technical analysis:

On the four-hour chart, USD/JPY trades at 158.95, maintaining a capped tone as it sits below the 20-period simple moving average (SMA) at 159.12 and the 100-period SMA at 159.21. The pair has slipped back under this short-term moving-average cluster, suggesting rallies are being sold, while the Relative Strength Index (RSI) near 47 points to fading bullish momentum rather than outright oversold conditions.

On the topside, initial resistance aligns at 158.96, with further hurdles at 159.10 and the 20-period SMA at 159.12, ahead of the 100-period SMA at 159.21 and a stronger barrier near 159.30. On the downside, immediate support is located at 158.83, where a horizontal level underpins the recent pullback; a sustained break below this floor would open the door to a deeper correction in the near term.

(The technical analysis of this story was written with the help of an AI tool.)