Japanese Yen remains on the front foot against USD as traders await BoJ Governor Ueda’s presser

• The Japanese Yen remains intraday positive after the BoJ decided to leave rates unchanged.
• The BoJ upgraded its inflation forecast, leaving the door open for rate hikes later this year.
• A modest USD pullback from a multi-month peak also exerts some pressure on USD/JPY.

The Japanese Yen (JPY) retreats a few pips from the Asian session peak, though it retains positive bias against a softer US Dollar (USD) through the Asian session on Thursday. The markets react little to an upward revision of the Bank of Japan (BoJ)’s inflation forecast as the JPY bulls opt to wait for more cues about the central bank’s intention to raise interest rates before the year-end. Hence, the focus will remain glued to BoJ Governor Kazuo Ueda’s post-meeting press conference.

In the meantime, the upbeat domestic macro data released earlier this Thursday underpins the JPY. However, expectations that the BoJ could delay the timing of the next rate hike amid signs of cooling inflation in Japan and domestic political uncertainty cap the JPY. The USD, on the other hand, draws support from the Federal Reserve’s (Fed) hawkish tone on Wednesday. This further helps limit the downside for the USD/JPY pair and warrants some caution before positioning for deeper losses.

Japanese Yen maintains bid tone amid reviving BoJ rate hike bets

• A preliminary government report showed this Thursday that Industrial Production in Japan rose 1.7% from the previous month in June, beating consensus estimates and signaling resilience among manufacturers despite headwinds from US trade tariffs.
• A separate report revealed that Retail Sales in Japan grew for the 39th consecutive month, by 2.0% year-on-year in June. This marked a slight uptick from the previous month’s downwardly revised 1.9% growth and also exceeded market expectations.
• The latter signaled that Japanese private consumption remained strong despite headwinds from sticky inflation and economic uncertainty. This, along with the US-Japan trade deal, keeps hopes alive for the Bank of Japan rate hike later this year.
• As was widely anticipated, the BoJ decided to maintain the status quo at the end of the July meeting. The central bank revised its Core CPI forecast to +2.7% for the fiscal year 2025 vs the previous +2.2%. Moreover, the BoJ reiterated that it will continue to raise the policy rate if the economy and prices move in line with the forecast.
• The ruling Liberal Democratic Party’s loss in the July 20 polls fueled concerns about Japan’s fiscal health amid calls from the opposition to boost spending and cut taxes. This suggests that prospects for BoJ rate hikes could be delayed for a bit longer.
• Meanwhile, the US Federal Reserve kept interest rates unchanged on Wednesday in a split decision that saw two governors dissenting for the first time since 1993. Furthermore, Fed Chair Jerome Powell tempered hopes for a rate cut in September.
• Addressing reporters during the post-meeting press conference, Powell said it was too soon to say whether the Fed would cut rates at its next meeting and that the current modestly restrictive monetary policy has not been holding back the economy.
• This adds to the early optimism driven by the upbeat US macro data and pushes the US Dollar to its highest level since late May. The ADP report showed that private-sector payrolls surged by 104K in July, reversing June’s 33K decline and beating estimates.
• Furthermore, the Advance US Gross Domestic Product (GDP) report published by the US Commerce Department showed that the economy expanded at a 3.0% annualized pace during the second quarter, following a 0.5% contraction in the first quarter.
• Thursday’s US economic docket features the release of the Personal Consumption Expenditure (PCE) Price Index, which will influence the USD price dynamics and provide some impetus to the USD/JPY pair later during the North American session.

USD/JPY constructive technical setup backs case for emergence of dip-buying

From a technical perspective, the USD/JPY pair stalls the post-Fed move higher near the 200-day Simple Moving Average (SMA). The said barrier is pegged near the 149.55 region and should now act as an immediate hurdle. Given that oscillators on the daily chart have been gaining positive traction, sustained strength beyond should pave the way for a move towards reclaiming the 150.00 psychological mark. The momentum could extend further towards the next relevant hurdle near the 150.40 area before spot prices eventually climb to the 151.00 round figure.

On the flip side, any further corrective slide could find decent support near the 148.55 region, below which the USD/JPY pair could slide to the 148.00 mark and the overnight swing low, around the 147.80 area. Failure to defend the said support levels might then drag spot prices to the 147.00 mark en route to the 100-day SMA support, currently pegged near the 146.70 region. The latter coincides with last week’s swing low, which, if broken, might shift the near-term bias in favor of bearish traders and pave the way for a slide towards testing sub-146.00 levels.

Japanese Yen PRICE Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).