USD/JPY Bears Eye Downward Trend as US Dollar Faces Pressure

The current market for USD/JPY is dominated by the bears, who are eagerly anticipating a continuation of the downward trend. At this crucial moment, the trendline support is highly vulnerable. As Tokyo traders enter the market on Friday, the price of USD/JPY remains stagnant, resting below a significant resistance area near 132.70 on the 4-hour charts. The US Dollar is facing pressure, mainly due to the week's data that has led to the belief that the Federal Reserve will pause in its tightening policy campaign, with just one last rate hike scheduled for May.

The primary focus of the market has been on the inflation data, with the Consumer Price Index (CPI) showing a year-on-year decrease from 6% in February to 5% in March. Furthermore, the Producer Price Index (PPI) for final demand, which was released on Thursday, also indicated a continued decrease in inflationary pressures, with a 0.5% drop last month. Over the twelve months leading to March, the PPI increased 2.7%, representing the smallest year-on-year rise since January 2021, following a 4.9% increase in February.

In the event that the price breaks out of the dynamic trendline, we can expect to see a further pushdown in the price, moving in a downward direction.