|

USD/JPY slips below 146.00 on mixed US data, BoJ split policy views

  • USD/JPY trades at 145.60, down 0.42%, as positive US data fails to lift the pair; DXY advances 0.51% to 103.718 but can't buoy USD/JPY.
  • CME FedWatch Tool suggests the Fed will keep rates unchanged in September.
  • Japan's retail sales exceed expectations with a 6.8% YoY increase, but a disappointing 2.4% contraction in Industrial Production adds to BoJ's policy dilemma.

The Greenback (USD) prints losses against the Japanese Yen (JPY) after reaching a daily high of 146.22, back below 146.00. Data from the United States (US) came better than expected but failed to bring the USD/JPY to life. The pair is trading at 145.60, down 0.42%

Greenback struggles to attain gains vs. the Yen despite better-than-expected data

A busy weekly economic agenda keeps most US Dollar pegged currency pairs trading volatile. Following Tuesday and Wednesday’s session, the buck was under a lot of stress. However, it regained some of its composure against most G10 FX currencies, except for the Japanese Yen.

The US Commerce Department revealed that the US Federal Reserve’s (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE), came as expected, climbing 4.2% YoY and 0.2% MoM as both figures aligned with the street’s forecasts. Regarding headline inflation, PCE remained unchanged at 3.3% YoY and 0.2%.

Other data showed that Initial Jobless Claims for the week ending August 26 came at 228K, below its forecast of 235K, according to the US Department of Labor. This, is contrary to the latest jobs data released, which pointed out the labor market was losing steam.

Today’s data added to past jobs releases in the US, alongside month-end flows, underpin the US Dollar (USD), which reached a bottom and is climbing according to the US Dollar Index (DXY). The DXY, an index that tracks a basket of six currencies’ performance vs. the USD, advances 0.51%, up at 103.718.

Even though economic growth has lost a step, it remains above the prior estimate of 2%, at 2.1% in the second quarter. That, alongside the US Commerce Department saying that consumer spending remains steady, jumping 0.8% in July, could keep the Fed in check. The CME FedWatch Tool, which depicts traders’ beliefs about increasing borrowing costs in the US, portrays that the Fed will keep rates unchanged at the September meeting. However, for November, the odds remain at 44.1% for a 25 bps increase.

In the meantime, Atlanta’s Fed President Raphael Bostic said the policy was appropriately restrictive to bring inflation towards the US central bank’s 2% target over a “reasonable” period.

On the Japanese front, Bank of Japan (BoJ) policymakers split between seeking a normalization of monetary policy and continued stimulus. BoJ’s board member Toyoaki Nakamura said it’s premature to tighten monetary conditions, as high import prices have driven inflation. He added that once the “deflationary mindset” is eradicated, the BoJ won’t need the Yield Curve Control (YCC).

Data-wise, Japan’s retail sales grew higher than the 5.4% YoY expected and rose by 6.8% in July, while Industrial Production plunged -2.4%, disappointing investors, which were expected a contraction of -1.4%.

USD/JPY Price Analysis: Technical outlook

The pair remains upward biased despite falling below the Tenkan-Sen, which has been recovered by buyers early in Thursday’s session. Even though the bulls are in charge, the USD/JPY must climb above yesterday’s high of 146.53 to pave the way for further upside, eyeing the year-to-date (YTD) high of 147.37. Otherwise, downside risks emerge below 145.55, which, once cleared, the major can dive and test the August 23 swing low of 144.54.

USD/JPY

Overview
Today last price145.58
Today Daily Change-0.66
Today Daily Change %-0.45
Today daily open146.24
 
Trends
Daily SMA20145.01
Daily SMA50143.13
Daily SMA100140.27
Daily SMA200136.76
 
Levels
Previous Daily High146.54
Previous Daily Low145.56
Previous Weekly High146.64
Previous Weekly Low144.54
Previous Monthly High144.91
Previous Monthly Low137.24
Daily Fibonacci 38.2%146.16
Daily Fibonacci 61.8%145.93
Daily Pivot Point S1145.69
Daily Pivot Point S2145.13
Daily Pivot Point S3144.71
Daily Pivot Point R1146.67
Daily Pivot Point R2147.09
Daily Pivot Point R3147.65

Author

Christian Borjon Valencia

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

More from Christian Borjon Valencia
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.