USD/JPY Pulls Back But Still Above 20 & 50-Day EMAs

Yen gained around 0.40% for Tuesday's session, amid generally softer USD conditions against the majors, with the BBDXY down -0.17%. EUR was the main exception. USD/JPY currently tracks slightly above Tuesday session lows, last in the 141.05/10 region. The pair couldn't sustain moves above 141.50 post the Asia Pac close on Tuesday.

• Technically, USD/JPY still looks supported. We are above the 20 and 50-day EMAs, albeit just. The 20-day sits nearby at 140.90, while the 50-day is back at 140.16. On the topside, sights are on 142.08, the 61.8% Fibonacci retracement for the early July downleg. A break would open 143.22, the 76.4% retracement point. On the downside, initial support to watch lies at 139.75, the Jul 21 low.
• In the cross-asset space, US equities finished higher, but away from best levels. Bank stocks weighed on broader sentiment, with the sell-off coming after news that Banc of California was in advanced news to buy PacWest. Still, US futures were supported on better Alphabet earnings in the tech space, while a Wells Fargo share buyback also helped sentiment.
• US yields were higher for Tuesday's session, but like equities finished away from highs (2yr back under 4.90%). Yield differentials are still mostly pointing north for USD/JPY at this stage.
• Locally, the Japan government expects long term inflation to remain around 0.7% in the long run (2027-2032) under its baseline scenario (see this link). The Cabinet Office forecasts were presented to Council on Economic and Fiscal Policy, which advises Japan Prime Minister Kishida.
• On the data front, we have the June PPI services print. The market projects +1.5% y/y, versus 1.6% prior. Later on, the leading and coincident indices (final for May) print.