USD/JPY rallies on CPI data

The USD/JPY is generally in overbought conditions, but the BoJ’s dovish stance would keep the yen weak. A clear break of 145.00 would send the pair rallying toward August 1998 at 147.67.

The USD/JPY rallied after the US Department of Labour reported that inflation was decelerating but exceeding estimations, catching off USD/JPY traders expecting a lower reading. At the time of writing, the USD/JPY is trading at 144.43, up by 1.09%.

After the US inflation report struck some financial assets, the USD/JPY rallied towards the daily highs at 144.68. It is worth noting that the Relative Strength Index (RSI), alongside price action, shows signs that the USD/JPY is overbought. Nevertheless, the Bank of Japan’s dovish stance would likely pressure the Japanese yen, opening the door for the August 1998 test at 147.67.