On Wednesday, a survey showed the US manufacturing activity was more robust than investors expected for May pushing the dollar and subsequently USD/JPY higher. This move cooled off Thursday morning as traders took profits at the 130.00 level.

The move down today can also be attributed to the hope investors got when there was news of a possible increase in oil production by Saudi Arabia in case Russia’s output dropped. This news cooled some of the inflation fears brought on by high energy prices. Increased production would reduce global supply pressures and lower oil prices.

A significant part of the inflation experienced by many economies worldwide is a result of high energy prices pushing the cost of living higher. Lower oil prices would therefore be an essential weapon against inflation. For this reason, Thursday morning saw USD/JPY give up some of its earlier gains.
The price is currently experiencing a bit of resistance at the 130.00 critical level. At this level, the price could do one of two things. The first is that the price might bounce off the 130 level and pull back to the 20-SMA, and the second is that it might push higher to 131 before pulling back. 

USDJPY D1 06 02 2022 1657

 

 

 

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