The Japanese yen has hit the brakes on this week’s impressive rally. USD/JPY is trading at 154.34 in the European session, up 0.30% on the day. On Thursday, the yen climbed as much as 1.3% but gave up all of those gains after the strong US GDP report. Still, the yen is up 1.9% this week.
Tokyo Core CPI ticks higher
Tokyo Core CPI rose to 2.2% y/y in July, a notch higher than the 2.1% gain in June and matching the market forecast. This is the third straight acceleration and the highest level since March. Higher electricity prices drove the gain. Earlier this week, service inflation for businesses rose to 3% in July, up from 2.7% in June and above the market forecast of 2.6%. This was the highest level in 33 years.
The Bank of Japan faces a tough task and must decide whether to maintain policy or deliver a rate hike at next week’s meeting. It’s a close call as to what decision the central bank will make and Bank officials can be expected to maintain radio silence.
There are strong arguments for both sides. Inflation and wage growth have been moving higher which would support a rate hike. As well, a rate hike could give a boost to the yen, which has been trading at multi-year lows. On the other hand consumption remains weak and a rate hike would only further dampen consumer spending.
Fed eyes Core PCE Price Index
Later today, the US releases Core PCE Price index, which is the Federal Reserve’s preferred inflation measure. The index is expected to rise 0.1% m/m in June, matching the May figure. The PCE Price index is expected to ease to 2.5% y/y, down a notch from 2.6% in May.
USD/JPY technical
-
USD/JPY has pushed past resistance at 154.03 and is testing resistance at 154.39, followed by 154.68.
-
153.74 and 153.38 are the next support levels.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD keeps its daily gains near 1.0860 post-US PCE
The slightly bearish tone in the Greenback motivates EUR/USD to maintain its constructive bias on Friday around 1.0860 in the wake of the release of the US inflation data measured by the PCE.
GBP/USD hovers around 1.2860 on US PCE prints
GBP/USD maintains the positive stance around 1.2860-1.2870 band amidst the marginal pullback in the US Dollar following the publication of US inflation tracked by the PCE.
Gold looks bid near $2,375 following US inflation
Gold prices cling to their constructive bias around $2,375 after US inflation data gauged by the PCE matched consensus in April and US yields trade on the defensive across the curve.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.