USDJPY analysis - CPI preview- Can we predict the reaction before the CPI

The above is the daily chart of USDJPY. On our previous analysis, we said that we are bearish on usdjpy. We continue to be bearish on USDJPY. Our target is Q2 2026 low. But we need to choose the places where we enter so that the odds are more favourable for us. Even then there are no guarantees. Now following a steep drop, there has been number of liquidity gaps which could be targets.

We are right below a liquidity zone prior to the CPI event tomorrow. In our view, the DXY will sell off following the CPI. Here we are not predicting the number. We are trying to predict the market behaviour around key zones based on the Market structure and based on our preexisting premises. This may or may not work. But atleast we are trying.

Here is the 1 hour chart of USDJPY. After the steep fall, the price has drifted higher and price is now sitting below a key liquidity zone. IF the price closes above the liquidity zone, then the price will go all the way to the top liquidity zone and test 162. we will however be watching closely the price action of USDJPY in the New York session today. In particular we will be watching the price action at the liquidity zone in the 1 hour chart we have marked above. IF the price gets rejected and the market structure is broken at any point of time before CPI (this should be on the 4 hour time frame), the evidence will point to a bearish reaction to the dollar.

So if price test the liquidity zone and price gets rejected today, we will enter USDJPY shorts with stops above the liquidity zone. Most of the time the market makers will show their hand before the news and if you understand market manipulation, then you can predict prices.

All analysis done in good faith and not investment advice.

May the Peace of the Lord be with you all.