USD/JPY slides as US economic woes mount, BoJ signals policy shift

USD/JPY trades down 0.13% at 145.68, pressured by disappointing US labor market data and lower-than-expected Q2 GDP growth.
US 10-year Treasury Note yield dips to 4.102%, further weakening the dollar, as the DXY index slumps 0.43% to 103.041.
BoJ board member Naoki Tamura signals inflation is "clearly in sight," hinting at a potential end to negative rates next year, which could bolster the Yen further.

Christian Borjon Valencia FXStreet

The Japanese Yen (JPY) registers back-to-back positive sessions against the US Dollar (USD), which remains downward pressured after last Tuesday’s data depicted the US labor market is cooling. Today’s data reinforced the latter, easing pressure on the US central bank to increase borrowing costs. The USD/JPY is trading at 145.68, down 0.13%, after reaching a daily high of 146.84.

Yen gains momentum vs. a battered US Dollar amid soft labor and GDP data

The Greenback extended its losses courtesy of weaker-than-expected growth data. The US Commerce Department Q2’s Gross Domestic Product (GDP) was 2.1% below the government’s previous estimates of 2.4%, an uptick from Q1’s 2%. That, alongside the ADP National Employment report missing estimates of 195K at 177K, revealed the labor market is losing steam.

On Tuesday, the US Department of Labor revealed 1.51 job openings for every unemployed person, the lowest ratio since September 2021, compared with 1.54 in June.

Given the worse-than-expected economic data, US Treasury bond yields fell. The US 10-year Treasury Note yield slides two basis points down to 4.102%, a headwind for the USD/JPY pair due to its close positive correlation. That undermined the US Dollar (USD), which, according to its index, the US Dollar Index (DXY) slumps 0.43%, down at 103.041.

On the Japanese front, the Bank of Japan (BoJ) board member Naoki Tamura said that inflation is “clearly in sight,” indicating that negative rates could end next year. Market participants are eyeing the BoJ’s next move, as it’s the only global central bank easing monetary policy. Once the BoJ normalizes its monetary policy, broad Japanese Yen (JPY) strength is expected. It could trim its 11.22% YTD losses against the Greenback, suggesting further USD/JPY downside is expected.

USD/JPY Price Analysis: Technical outlook

From a technical perspective, the USD/JPY remains upward biased, though the pair slide below the Tenkan-Sen line at 145.95 could open the door for a pullback, with support emerging at the June 30 daily high turned support at 145.07. Otherwise, if buyers reclaim the Tenkan-Sen line, the next stop would be 146.00. A breach of the latter could pave the way for a test of the year-to-date (YTD) high of 147.37.

USD/JPY

Overview
Today last price	145.81
Today Daily Change	-0.07
Today Daily Change %	-0.05
Today daily open	145.88

Trends
Daily SMA20	144.87
Daily SMA50	143.04
Daily SMA100	140.14
Daily SMA200	136.73

Levels
Previous Daily High	147.38
Previous Daily Low	145.67
Previous Weekly High	146.64
Previous Weekly Low	144.54
Previous Monthly High	144.91
Previous Monthly Low	137.24
Daily Fibonacci 38.2%	146.32
Daily Fibonacci 61.8%	146.72
Daily Pivot Point S1	145.24
Daily Pivot Point S2	144.6
Daily Pivot Point S3	143.53
Daily Pivot Point R1	146.95
Daily Pivot Point R2	148.02
Daily Pivot Point R3	148.66

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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