USD hits 30-year high vs JPY following US inflation rate data

Data current as of 4/10/2024

Key points

• USD/JPY hits highest level since 1990: (0:35)
• USD higher vs EUR, GBP, AUD: (1:47)
• CPI inflation rate 0.1% higher than expected: (3:30)
• Interest rates rise, Fed cuts delayed: (4:46)
• EUR/USD breaks below 1.0750: (6:21)

USD/JPY hits highest level since 1990

The USD/JPY currency pair experienced a notable rally, soaring above 152.00 and reaching a peak unseen since 1990. This remarkable ascent reflects the US dollar's strong position in forex markets, influenced by prevailing economic indicators and investor sentiment towards the US economy. With growing speculation for continued high US interest rates, the gap between 5.5% rates (US) and 0% (Japan) is causing a particularly large shift in demand for US dollar over the Japanese yen.

USD higher vs EUR, GBP, AUD

Following the release of higher-than-expected CPI inflation data, the euro, British pound, and Australian dollar each depreciated significantly against the US dollar, losing over 100 pips. This movement underscores the US dollar's dominance and the impact of inflation rates on currency strength.

CPI inflation rate 0.1% higher than expected

The Consumer Price Index (CPI) for March revealed core and headline inflation rates of 3.8% and 3.5% respectively, slight increases of 0.1% over forecasts. Such marginally higher inflation rates suggest persistent price pressures, potentially influencing central bank policies and forex trading strategies.

Interest rates rise, Fed cuts delayed

Yields on the 10-Year Treasury reached 4.5%, and the likelihood of the Federal Open Market Committee (FOMC) lowering interest rates in June diminished from 60% to 20%. Without a rate cut in June, it will be harder for the Fed to maintain their expected plan of 3 rate cuts in 2024. Increased yields signal concerns over inflation and economic growth in real time, affecting forex market dynamics and trader expectations ahead of central bank decisions.

EUR/USD breaks below 1.0750

As the US dollar strengthens, the EUR/USD pair plunged below the 1.0750 mark, approaching year-to-date lows. This depreciation highlights the euro's vulnerability to shifts in USD strength as the Euro Area looks to begin cutting rates in coming months - most likely before the US.

How to trade USD/JPY

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on USD/JPY

Trading forex requires an account with a forex broker like IG. USD/JPY can be found under the 'Major' pairs tab. Many traders watch major forex pairs like GBP/USD and EUR/USD for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.