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Dollar uptrend vs yen gets tested by Japan CPI, US data, but PCE key

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Feb 27 (Reuters) -USD/JPY fell to supports by 150 on Tuesday after Japan's January core CPI fell less than forecast, favoring an already expected 10bp April BoJ hike to zero, while the recovery from the lows is saddled with a big miss in U.S. consumer confidence.

With Thursday's core PCE still the week's crucial data, USD/JPY found support near its low of 150.08 from the converging 2024 uptrend line and recently cleared downtrend line off Feb. 13's 150.88 high for the year. The daily tenkan at 150.17 is also in the mix. A close below 150 would weaken the near-term outlook.

Weaker-than-forecast U.S. durable goods orders were shrugged off, as well as the pullback in consumer confidence, both increasing the importance of Thursday's core PCE and jobless claims.

But as Kansas City Federal Reserve Bank President Jeffrey Schmid noted late on Monday, there's a convincing case for the Fed to remain focused on fighting inflation.

If that case is reinforced by Thursday's core PCE, February ISMs and the March 8 jobs report, USD/JPY should make new 2024 highs and perhaps hit 2023/22's 32-year peaks at 151.92/94.

However, dovish U.S. data could hit prices harder due to extreme spec long USD/JPY positioning.

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(Randolph Donney is a Reuters market analyst. The views expressed are his own.)


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