- USD/JPY attracts some buyers on Thursday, albeit the uptick lacks follow-through.
- The Fed’s hawkish outlook overshadowed the softer US CPI and lends some support.
- Traders seem reluctant and look to the BoJ decision before placing directional bets.
The USD/JPY pair ticks higher during the Asian session on Thursday and looks to build on the overnight bounce from the 155.70 area or a multi-day low touched in reaction to softer US consumer inflation figures. Spot prices, however, lack bullish conviction and currently trade around the 156.75-156.80 region as the focus now shifts to the Bank of Japan (BoJ) policy meeting.
Heading into the key central bank event risk, the Federal Reserve's (Fed) hawkish surprise on Wednesday acts as a tailwind for the US Dollar (USD) and turns out to be a key factor lending some support to the USD/JPY pair. In fact, policymakers believed that fewer rate cuts were needed this year as inflation is expected to trend higher than previously estimated and now see just one rate cut in 2024 as compared to three projected in March.
The outlook, to a larger extent, overshadowed the softer US Consumer Price Index (CPI) print, which was unchanged in May, for the first time since last June, and edged down to 3.3% on a yearly basis from 3.4% in April. Furthermore, the US Bureau of Labor Statistics (BLS) reported that the annual core CPI, which excludes volatile food and energy prices, fell to a more than three-year low of 3.4% as compared to the 3.6% in April and 3.5% expected.
Nevertheless, the shift in the Fed's projections should underpin the USD and support prospects for a further appreciating move for the USD/JPY pair. Bulls, however, seem reluctant amid uncertainty if the BoJ will announce a reduction in the monthly government bond purchases amid a weaker economy. Hence, the focus will remain on the outcome of the highly-anticipated two-day BoJ meeting, scheduled to be announced on Friday.
In the meantime, Thursday's US economic docket – featuring the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data – will be looked upon for short-term trading opportunities later during the early North American session. Apart from this, the broader risk sentiment, which tends to drive demand for the safe-haven Japanese Yen (JPY) might provide some impetus to the USD/JPY pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD corrects sharply toward 1.0950 ahead of US NFP, Powell
EUR/USD is extending its correction toward 1.0950 in the European session on Friday. The US Dollar has come up for air after the trade war and recession fears-led sell-off, weighing on the pair. Traders look to the US NFP report and Fed Chair Powell's speech for fresh directives.
GBP/USD remains heavy near 1.3000, US NFP data awaited
GBP/USD is battling 1.3000, under heavy selling pressure in European trading on Friday. Traders resort to profit-taking on their US Dollar short positiions, re-adjusting ahead of the critical US Nonfarm Payrolls data and Fed Chair Powell speech.
Gold price sticks to negative bias around $3,100; bears seem non-committed ahead of US NFP report
Gold price meets with a fresh supply on Friday, though the downside potential seems limited. Trump’s tariffs-inspired risk-off mood might continue to act as a tailwind for the precious metal. Fed rate cut bets weigh on the USD and also contribute to limiting losses for the XAU/USD pair.
Nonfarm Payrolls forecast: US jobs growth set to slow in March amid growing worries over US tariffs
Nonfarm Payrolls are forecast to rise by 135K in March, following a 151K gain reported in February. The United States Bureau of Labor Statistics will release the jobs data on Friday at 12:30 GMT. US labor data could impact the Fed’s interest rate path, potentially affecting the US Dollar's price action.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.