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USD/JPY Continues Upward Move Eyes 159.00, CPI Below Expectations

JPY
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The USD/JPY pair continued its upward trajectory on Thursday, closing near session highs at 158.93. This marks the sixth consecutive session of losses for the yen. The yen's sustained weakness is largely due to a significant divergence in yields between Japan and its major peers, notably the US. Despite the Bank of Japan's reluctance to reduce bond buying, traders remain uncertain about when Japan will normalize its policy, which would support the yen.

  • The pair opened Thursday trading at 158.10, and dipped to an intraday low of 157.93 early before recovering and closing near the day's highs at 158.93
  • The USD continues to show resilience, supported by still-high US interest rates. The BBDXY rose 0.2% to 1,267.71, its highest closing level since early November. The index is on track for its fifth straight week of gains.
  • Technical outlook: The trend signal in USDJPY is unchanged, it remains bullish and the pair is trading at its recent highs. An important resistance at 157.71, the May 29 high, has been breached. Support - 156.87 (20-day EMA), Resistance 159.03 (1.0% 10-dma envelope), 159.63 (1.236 proj of the May 3 - 14 - 16 price swing)
  • The risk of intervention by Japanese officials is heightened as the yen approaches critical levels. Past interventions were triggered at similar points.
  • Japanese officials have shown reluctance to intervene frequently, opting for a more cautious approach. However, they are prepared to step in if moves are deemed "excessive," "speculative," or "deviated from economic fundamentals."
  • Just a moment ago we had CPI y/y come in below expectations at 2.8% vs 2.9 est, Natl CPI Ex Fresh Food 2.5% vs 2.6 est & Natl CPI Ex Fresh Food, Energy 2.1% vs 2.2% est. Despite coming in below estimates inflation numbers were up on last month, which backs the case for the BoJ to consider further rate hikes.
  • Up next we have Jibun Bank Japan PMI at 10:30am AEST
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The USD/JPY pair continued its upward trajectory on Thursday, closing near session highs at 158.93. This marks the sixth consecutive session of losses for the yen. The yen's sustained weakness is largely due to a significant divergence in yields between Japan and its major peers, notably the US. Despite the Bank of Japan's reluctance to reduce bond buying, traders remain uncertain about when Japan will normalize its policy, which would support the yen.

  • The pair opened Thursday trading at 158.10, and dipped to an intraday low of 157.93 early before recovering and closing near the day's highs at 158.93
  • The USD continues to show resilience, supported by still-high US interest rates. The BBDXY rose 0.2% to 1,267.71, its highest closing level since early November. The index is on track for its fifth straight week of gains.
  • Technical outlook: The trend signal in USDJPY is unchanged, it remains bullish and the pair is trading at its recent highs. An important resistance at 157.71, the May 29 high, has been breached. Support - 156.87 (20-day EMA), Resistance 159.03 (1.0% 10-dma envelope), 159.63 (1.236 proj of the May 3 - 14 - 16 price swing)
  • The risk of intervention by Japanese officials is heightened as the yen approaches critical levels. Past interventions were triggered at similar points.
  • Japanese officials have shown reluctance to intervene frequently, opting for a more cautious approach. However, they are prepared to step in if moves are deemed "excessive," "speculative," or "deviated from economic fundamentals."
  • Just a moment ago we had CPI y/y come in below expectations at 2.8% vs 2.9 est, Natl CPI Ex Fresh Food 2.5% vs 2.6 est & Natl CPI Ex Fresh Food, Energy 2.1% vs 2.2% est. Despite coming in below estimates inflation numbers were up on last month, which backs the case for the BoJ to consider further rate hikes.
  • Up next we have Jibun Bank Japan PMI at 10:30am AEST