USD/JPY is in retreat after more U.S. data suggesting the 25 basis point Federal Reserve rate hike markets see as likely in May will be its last before a rate cutting cycle starts later this year, removing the primary driver of USD/JPY gains since the pandemic began.

Prices broke below daily tenkan and 50% Fibo of April's 130.64-134.045 range on EBS at 132.34, as well as the weekly cloud base at 132.24 that is key on Friday's close.
The 61.8% Fibo is at 131.94.

If Friday brings the first sub-cloud close in over two years, it could make the rebound from March's 129.645 bank crisis lows look like just an ABC correction within the broader downtrend from 2022's 20-year peak.

U.S.
data released this month has pointed to inflationary pressures slowly abating and the labor market becoming less tight, but key for the outlook may be things like Friday's retail sales data and bank deposits, borrowings and credittightening indications from lenders and the Fed heading into the May 2-3 meeting.

Clear evidence credit isn't tightening may be needed to avert broader dollar damage.

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