USD/JPY’s recovers, but finds resistance at 146.55

The US dollar’s rebound from 145.15 is limited below 146.00. The market has turned cautious ahead of the results of US elections and CPI data, this is why the USDJPY is risking further decline to 142.00.

The US Dollar’s recovery from two-week lows at the 145.15 area lost momentum at 146.55 earlier on Wednesday, before pulling back to levels right above 146.00. The pair remains moderately bid on daily charts, trimming losses after a 1.85% decline over the previous three days.

Investors have turned cautious on Wednesday, which has favored the safe-haven dollar amid the uncertainty about the results of the US mid-term elections. The Republican “red wave” has not been seen, and both parties are in a tight race to decide the control of Congress and the fate of Joe Biden’s agenda for 2023.

In the absence of key macroeconomic events, the highlights of the week will be the release of US consumer inflation data. These figures might offer some insight into the Federal Reserve’s next monetary policy decision which could generate significant Dollar volatility.

Earlier today, Richmond Fed President, Richard Barkin, warned that the inflation fight “might lead to a downturn” as the central bank’s rate hikes are challenged by artificial elements such as “high consumer savings and lack of labor supply”. These comments might have put a lid on USD bulls.