CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

• Bearish technical outlook persists; pair remains below Ichimoku Cloud and 200-DMA, hinting at further declines.
• RSI suggests seller dominance, despite a temporary buyer-led recovery.
• Resistance levels to watch: 145.39 (Tenkan-Sen), 146.00, 146.92 (Senkou Span A), 148.45 (Kijun-Sen).
• Downside break below 144.00 targets 143.44 (August 26 low), with potential to test monthly low at 141.69.

The USD/JPY registered modest gains during the North American session on Thursday of over 0.27%. During the trading day, the pair retreated to a daily low of 144.22 but bounced off and ended the session near the 145.00 figure. At the time of writing, the major trades at 144.97 were virtually flat as Friday’s Asian session began.

USD/JPY Price Forecast: Technical outlook

From a technical perspective, the pair is downward biased despite registering a leg-up. Once the USD/JPY slid below the Ichimoku cloud and the 200-day moving average (DMA), it opened the door to posting a multi-month low of 141.69. Since then, the major enjoyed an uptick but failed to gain traction to clear the 150.00 figure.

The Relative Strength Index (RSI) shows sellers are in charge, although buyers enjoy a short-term leg-up.

If USD/JPY decisively clears 145.00, this could pave the way for further upside. Once it moves up, the first resistance would be the Tenkan-Sen at 145.39, followed by the 146.00 figure. Up next would be the Senkou Span A at 146.92, ahead of testing the Kijun-Sen at 148.45.

Conversely, if sellers push the exchange rate below 144.00, the next support would be the August 26 daily low of 143.44. A breach of the latter will expose the August monthly low of 141.69.

USD/JPY Price Action – Daily Chart

The JPY held on to earlier gains, with USD/JPY consolidating around mid-144, DBS FX & Credit Strategist Chang Wei Liang notes.

BOJ to continue normalizing monetary policy

“Markets will watch Tokyo CPI tomorrow closely, as BOJ Governor Ueda had expressed that further rate hikes could come if the Japanese economy moves in line with forecasts. Meanwhile, equity risks and tensions around the Middle East could keep the JPY supported on safe haven bids.” 

“On the political front, former Foreign and Defense Minister Kono Taro announced his plans to run in the Sep 27 LDP leadership election, and stated that it is appropriate for the BOJ to continue normalizing monetary policy as long as inflation remains in line with the Bank’s expectations. He also said it is time to discuss how to balance the budget as interest rates rise.”

• USD/JPY stays below 145.00 with US core PCE inflation on the horizon.
• Global market sentiment appears to be asset-specific.
• The BoJ is expected to raise interest rates again this year.

The USD/JPY pair trades sideways below the crucial resistance of 145.00 in Thursday’s European session. The asset struggles for direction as investors await the United States (US) Personal Consumption Expenditure inflation (PCE) report for July, which will be published on Friday.

Global market action appears to be asset-specific as risk-sensitive currencies have faced sharp selling pressure, while S&P 500 futures have posted significant gains in European trading hours. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its recovery above 101.20.

The US PCE inflation is expected to drive the next move in the US Dollar (USD) as it would influence market speculation for the Federal Reserve’s (Fed) September policy meeting. According to the CME FedWatch tool, the Fed is certain to pivot to policy-normalization in September but traders remain split over the likely size of interest rate cuts. 30-day Federal Funds Futures pricing tool shows that the likelihood of a 50 basis points (bps) interest rate reduction is 34.5%, while the rest favors a 25 bps.

In today’s session, investors await revised estimates for Q2 Gross Domestic Product (GDP) and Initial Jobless Claims data for the week ending August 23. Investors will keenly watch the jobless claims data as the Fed is now more concerned about deteriorating labor market strength.

On the Japan front, firm expectations of more interest rate hikes by the Bank of Japan (BoJ) continue to support the Japanese Yen (JPY). On Wednesday, BoJ Deputy Governor Ryozo Himino said, "There is no change to our stance that we would adjust monetary easing if economic activity and prices are likely to meet projections."

Meanwhile, investors await the Tokyo Consumer Price Index (CPI) data for August, which will be published on Friday. The inflation report is expected to show that the CPI, excluding Fresh Food, grew steadily by 2.2%.

The US Dollar (USD) is likely to trade in a range, probably between 143.80 and 145.20. In the longer run, USD remains under pressure; increase in momentum has increased the chance of it reaching 141.66, UOB Group analysts Quek Ser Leang and Lee Sue Ann note.

USD set to breach above 145.20

24-HOUR VIEW: “We expected USD to trade with a downward bias yesterday. However, instead of declining, USD rebounded from 143.67 to 145.04 and then pulled back to close at 144.57 (+0.43%). We are not able to glean much of the price action. Today, we expect USD to trade in a range, probably between 143.80 and 145.20.”

1-3 WEEKS VIEW: “In our most recent narrative was from Monday (26 Aug, spot at 143.85), we indicated that USD ‘remains under pressure.’ We also indicated that ‘the increase in momentum from last Friday has increased the chance of it reaching 141.66, the low registered early this month.’ Over the past couple of days, USD has not been able to make much headway on the downside. However, we will continue to hold the same view provided that 145.70 (no change in ‘strong resistance’ level) is intact.”

• USD/JPY weakens near 144.50 in Thursday’s early Asian session. 
• BoJ’s Himino said central bank would continue to raise interest rates if inflation stayed on course. 
• The Fed's dovish stance undermines the US dollar against the JPY. 

The USD/JPY pair remains on the defensive around 144.50 during the Asian trading hours on Thursday. The dovish remarks from the Federal Reserve (Fed) officials continue to undermine the US Dollar (USD) in the near term. Investors await the preliminary US Gross Domestic Product (GDP) growth number for Q2, which is expected to grow 2.8%.

The Bank of Japan (BoJ) Deputy Governor Ryozo Himino stated on Wednesday that the Japanese central bank would continue to raise interest rates if inflation stayed on course, while also closely monitoring financial market conditions. 

His comments echo those from BoJ Governor Kazuo Ueda last week, who said that recent market volatility would not derail its long-term rate hike plans. a majority of economists expect the BOJ to hike rates again this year, starting in December rather than October, according to a Reuters poll. 

On the other hand, the dovish comments from the US central bank have weighed on the Greenback against the JPY. Fed Chair Jerome Powell said that “the time has come for policy to adjust.” The markets have fully priced in a 25 basis points (bps) rate cut in September, while the possibility of a deeper rate cut stands at 36.5%, according to the CME FedWatch Tool. 

• USD/JPY rises 0.50%, crossing 144.00; downtrend persists with limited momentum for further gains.
• Key resistance at 145.00 crucial for bullish continuation; next targets at 146.39 (Tenkan-Sen), 146.48, and 148.84 (Kijun-Sen).
• If 145.00 isn't breached, may retest 144.00 with supports at 143.44 (August 26 low) and 141.69 (August 5 low).

The USD/JPY reverses its course and registers decent gains of over 0.50% on Wednesday as the Greenback gains some steam, yet it remains vulnerable to the release of crucial data over the remainder of the week. The pair trades at 144.73 after bouncing off daily lows of 143.68.

USD/JPY Price Forecast: Technical outlook

The USD/JPY downtrend remains intact, yet buyers stepped in and pushed the exchange rate above 144.00, with buyers unable to crack the 145.00 figure decisively. Momentum suggests that sellers had lost some steam as the Relative Strength Index (RSI) aims up, but they remain in charge.

For a bullish continuation, USD/JPY buyers must reclaim 145.00. Once surpassed, the Tenkan Sen at 146.39 would be next, followed by the March 11 daily low-turned resistance at 146.48 and the Kijun-Sen at 148.84.

Conversely, if USD/JPY remains below 145.00, this could pave the way for testing the 144.00 figure. Further downside lies at the August 26 low of 143.44, followed by the latest cycle low at 141.69, the August 5 low.

USD/JPY Price Action – Daily Chart

• USD/JPY rises to near 145.00 as the US Dollar recovers strongly.
• Upbeat US Consumer Confidence eases US hard landing fears.
• Investors await the Tokyo CPI and the US core PCE inflation for July.

The USD/JPY pair climbs to near 145.00 in Wednesday’s North American session. The asset strengthens as the US Dollar (USD) delivers a strong recovery move after posting a fresh annual low. The USD rebounds as upbeat United States (US) Consumer Confidence data for August diminished fears of a hard landing.

Market experts started anticipating a hard landing for the US economy after the US Nonfarm Payrolls (NFP) report for July showed a slowdown in labor demand and a significant increase in the Unemployment Rate. The hard landing is a scenario in which the economy enters a recession in an attempt to bring inflation down to the bank’s target.

US Conference Board showed on Tuesday that Consumer Confidence rose to 103.30 in August, beating expectations of 100.7. The sentiment indicator exhibits the confidence of individuals in the economic prospects.

Meanwhile, the market sentiment appears to be risk-off as investors turn cautious ahead of the US core Personal Consumption Expenditure price index (PCE) data for July, which will be published on Friday. The S&P 500 has posted nominal losses in the North American session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, recovered strongly above 101.00 from a fresh annual low of 100.50.

The underlying inflation data is expected to influence market speculation for the Federal Reserve (Fed) interest rate cut path. Financial markets currently expect that the Fed will begin reducing interest rates from the September meeting. Traders remain split over the likely rate-cut size.

On the Japanese Yen (JPY) front, investors await the Tokyo Consumer Price Index (CPI) data for August, which will be published on Friday. The data is expected to show that Tokyo CPI excluding Fresh foods rose steadily by 2.2% in August. The inflation data will influence market speculation for the Bank of Japan's (BoJ) interest rate hike path.

• USD/JPY retreats from 145.00, pressured by falling US Treasury yields and a weakening Dollar.
• Bearish trend outlook; momentum favors sellers with RSI staying negative.
• Key supports: August 26 low at 143.44, then 143.00, 142.00, and August 5 low at 141.69.
• Upside: Break above 144.00 targets resistance at 146.42 (Tenkan-Sen) and potentially 147.00.

The USD/JPY retreats from around the 145.00 area and tumbles under the 144.00 figure as US Treasury bond yields edge lower. The Greenback extends its losses, as seen by the US Dollar Index (DXY), which tracks a basket of six currencies against the buck. It dropped 0.31% to 100.54. At the time of writing, the major trades at 143.94, down by 0.40%.

USD/JPY Price Forecast: Technical outlook

The USD/JPY continues to trade “relatively sideways,” with sellers stepping in ahead of Friday's release of crucial US inflation data. Nevertheless, from a technical point of view, the pair will re-test August’s 5 daily low of 141.69 if traders clear some hurdles on the way south.

As of writing, momentum favors sellers, as portrayed by the Relative Strength Index (RSI), which remains bearish. With this said, USD/JPY's first support level would be the August 26 swing low of 143.44. Once surpassed, the next stop would be the psychological 143.00 figure, followed by the 142.00 figure, before challenging the August, as mentioned above, 5-cycle low.

Conversely, if USD/JPY clears the 144.00 figure, the pair could aim upward and challenge higher prices. The next resistance would be the Tenkan-Sen at 146.42, followed by the 147.00 mark.

USD/JPY Price Action – Daily Chart

• USD/JPY falls below 145.00 as the US Dollar remains on the backfoot.
• Traders remain divided over the likely size of the Fed’s September interest rate cuts.
• Investors doubt how much inflation in Japan will pick up this year.

The USD/JPY pair falls to near 144.70 in Tuesday’s European session. The asset drops as the US Dollar (USD) remains on the backfoot as market participants appear to be certain that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, exhibits a subdued performance below 101.00.

Investors’ risk-appetite has diminished as tensions between Iran and Israel in the Middle East have escalated. S&P 500 futures surrender gains posted in Asian trading hours. While the broader market sentiment remains cheerful amid confidence that the Fed will pivot to policy-normalization in September.

Though the Fed seems certain to cut interest rates in September, traders remain split over the likely size of rate cuts, given that United States (US) recession fears have eased significantly. The CME FedWatch tool shows that the likelihood of a 50-basis point (bps) interest rate reduction is 28.5%.

For fresh interest rate guidance, investors await the US core Personal Consumption Expenditure Price Index (PCE) data for July, which will be published on Friday. The annual core PCE is estimated to have grown at a higher pace of 2.7% from 2.6% in June, with monthly figures growing steadily by 0.2%. Signs of price pressures remaining persistent would weigh on expectations of bigger interest rate cuts.

Meanwhile, the Japanese Yen (JPY) outweighs the US Dollar on the latter’s weakness but is underperforming against its other peers. Easing signs of price pressures in Japan remaining sticky have raised doubts over the scope of Bank of Japan’s policy tightening. Japan’s Corporate Service Price Index, a key measure of producer inflation, came in lower at 2.8% in July than estimates of 2.9% and June’s reading of 3%. However, BoJ Governor Kazuo Ueda said last week that there is a need to raise interest rates further.

The US Dollar (USD) is likely to range trade, probably between 143.90 and 145.10. In the longer term, USD remains under pressure, and increase in momentum has increased the chance of it reaching 141.66, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

Rangebound between 143.90 and 145.10

24-HOUR VIEW: “We expected USD to ‘decline further, potentially reaching 142.80.’ We highlighted that ‘to keep the momentum going, USD must remain below 145.00.’ Our expectations did not turn out, as USD rebounded from 143.43 to 144.65, closing modestly higher at 144.52 (+0.10%). Slowing downward momentum, combined with oversold conditions, suggests USD is likely to range trade today, probably between 143.90 and 145.10.”

1-3 WEEKS VIEW: “We highlighted yesterday (26 Aug, spot at 143.85) that USD ‘remains under pressure.’ We also highlighted that the increase in momentum from last Friday ‘has increased the chance of it reaching 141.66, the low registered early this month.’ While we continue to hold the same view, oversold short-term conditions could lead to a couple of days of range trading first. Overall, only a breach of 146.50 (no change in ‘strong resistance’ level) would mean that the current downward pressure has eased.”

• USD/JPY stays under Ichimoku Cloud and 200-DMA at 151.22, maintaining downtrend with easing selling pressure.
• RSI trends upward, suggesting a potential short-term rally if USD/JPY surpasses 145.00.
• Resistance levels at 146.42 (Tenkan-Sen), 147.91 (Senkou Span A), and 149.39 (August 15 high).
• Below 144.00, key support at 141.69; further drop could target psychological 140.00 level.

The Japanese Yen (JPY) lost ground against the Greenback on Monday as the USD/JPY pair edged up 0.13% amid an uptick in US Treasury bond yields. At the time of writing, the pair was at 144.59 after bouncing off daily lows of 143.44.

USD/JPY Price Forecast: Technical outlook

 The USD/JPY downtrend is intact as the exchange rate remains below the Ichimoku Cloud and the 200-day moving average (DMA) at 151.22. Nevertheless, sellers are losing some momentum, as depicted by the Relative Strength Index (RSI), remaining bearish, yet aiming up. That could pave the way for a leg-up before testing lower prices.

If USD/JPY clears 145.00, the next resistance emerges at the Tenkan-Sen at 146.42, followed by the Senkou Span A at 147.91. Further upside is seen at the confluence of the Kijun-Sen and the August 15 daily high of 149.39.

Conversely, if USD/JPY slumps below the 144.00 figure and the pair could tumble towards the latest cycle low seen at 141.69, before challenging 140.00.

USD/JPY Price Action – Daily Chart

USD/JPY plunged 2.2% to 144.37 last week. Bank of Japan Governor Kazuo Ueda stood by the decision to keep hiking rates, DBS Senior FX Strategist Philip Wee notes.

Ueda stands by the decision to keep hiking rates

“USD/JPY plunged 2.2% to 144.37 last week, opening the door to retesting the 141.70 low in early August.” 

“At the special parliamentary hearing on August 23, Bank of Japan Governor Kazuo Ueda stood by the decision to keep hiking rates if the central bank’s median economic forecasts were met or exceeded.”

“Ueda attributed the brief market volatility from July 11 to August 5 to rising fears of a US recession from the Fed’s rate cut bias on rising joblessness, not the BOJ’s rate hike.”

USD/JPY fell in response to Powell’s dovish remarks last Fri and extended its decline this morning following the escalation in geopolitical tensions between Israel and Hezbollah over the weekend, OCBC FX strategist Frances Cheung and Christopher Wong note.

Remain bias for downside play in USD/JPY

“Bullish momentum on daily chart faded while RSI fell. Risks skewed to the downside. Support at 142, 140.40 (61.8% fibo). Resistance at 144.50 (50% fibo retracement of 2023 low to 2024 high), 147.20 levels (21 DMA). We remain bias for downside play in USD/JPY.”

“Governor Ueda’s comments in parliament last Fri reinforced the view that BoJ rate hikes remain on the table while Powell’s ‘time has come’ speech at Jackson Hole reinforced the view that Fed’s next move is a cut.”

“Broader direction of travel for USD/JPY has changed as Fed-BoJ policies shifted from divergence to convergence and this should continue to underpin the downside for USD/JPY. In addition, geopolitical concerns is another factor that could add to support for safe-haven JPY.”

• USD/JPY extends its downtrend as markets diggest Fed Chairman Powell’s speech and its implications. 
• Expectations are for major cuts to US interest rates over the next year and a half as the US economy contracts. 
• The Japanese Yen benefits from the further unwinding of the carry trade. 

USD/JPY falls to the 144.10s on Monday, continuing its recent downtrend from the August 15 highs of 149.40. This means one US Dollar (USD) buys five less Japanese Yen (JPY) than it did 11 days ago. 

USD’s recent depreciation is due to increasing expectations that US interest rates are set to fall. The expectation of lower interest rates is negative for the Dollar because it lowers foreign capital inflows.

On Friday, at a speech given in Jackson Hole where global central bankers met for their yearly roundtable, the Chairman of the Federal Reserve (Fed) Jerome Powell gave his clearest signal yet that the Fed was about to cut interest rates. High interest rates were negative for employment, he said, and since inflation was now coming down in a more sustainable fashion the time was right to start cutting. “Upside risks to inflation have diminished, downside risks to employment have increased,” said Powell. USD/JPY fell over 1.3% as a result. 

In Japan deflation rather than inflation has been a problem, leading the Bank of Japan (BoJ) to keep interest rates ultra low – now 0.25% – and the Yen historically weak. 

Despite efforts by the government to encourage higher wages, inflation remains stubbornly low. Recent inflation data showed headline inflation at 2.8% in July YoY, the same level as June, and inflation ex fresh food at 2.7% – up from 2.6% in the previous month, a rise which was in line with forecasts. Inflation with both fresh food and energy taken out meanwhile fell to 1.9% from 2.2% in the previous month, which is below the BoJ’s 2.0% target for core inflation. 

This suggests the BoJ will not have a strong mandate to raise interest rates any higher and as a consequence the Yen will remain pressured. Even the fairly high 2.8% headline and ex-food inflation figures, it has been argued, were only high because of government energy subsidies which are to be canceled in September. This suggests a risk that after September inflation will also fall. 

That said, economists seem to broadly agree that the BoJ will still make one more interest rate hike of 0.25%, bringing interest rates to 0.50%, before the end of the year. Advisory service Capital Economics believes the hike will happen in October. After that the view is that for the whole of 2025 inflation will remain subdued and the BoJ will not be able to raise interest rates any further. 

In contrast markets are now pricing in 1.00% of cuts in 2024 and 1.30% of interest rate cuts by the Federal Reserve 2025, which if it were to happen would bring the Fed’s official interest rate down from a range of 5.50 - 5.25% to 3.20% - 2.95%. This would suggest that at the same time as US interest rates are falling by an aggregate of 2.3% over the next 16 months, Japanese Interest rates would be rising by 0.25% leading to an acute convergence of the current differential between the two. This partly explains the sudden fall in USD/JPY. 

Another factor is that now the Yen has established a firmer uptrend it is becoming less attractive as a funding currency in the carry trade. This is an investment strategy in which traders borrow in a currency where interest rates are low – like the Japanese Yen (JPY) – and purchase a currency where interest rates are high – like the US Dollar, or the Mexican Peso. 

Assuming no change in the exchange rate, traders stand to pocket the difference between the interest they have to pay on the loan and the interest they earn from the investment. However, given the Japanese Yen (JPY) is now trending higher and most of its favored carry counterparts are weakening, the carry trade is not as profitable as it used to be, and this  “unwind” in long held carry positions is further propelling USD/JPY lower.

Strong momentum suggests the US Dollar (USD) could decline further, potentially reaching 142.80. And, there’s also the chance of it reaching 141.66, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

Bears may try to reach 142.80 short term

24-HOUR VIEW: “Our view for USD to edge higher last Friday was incorrect. Instead of edging higher, it sold off sharply in NY trade, plummeting to a low of 144.04. USD continues to decline in early Asian trade today. Strong momentum indicates USD could potentially reach 142.80. The major support at 141.66 is unlikely to come under threat. To keep the momentum going, USD must remain below 145.00 (minor resistance is at 144.40).”

1-3 WEEKS VIEW: “In our most recent narrative from last Thursday (22 Aug, spot at 145.25), we held the view that USD ‘is under pressure.’ However, we indicated that ‘it does not appear to have sufficient momentum to threaten 141.66, the low registered early this month.’ Last Friday, USD fell sharply, closing lower by 1.29% (144.37). There has been an increase in momentum and USD remains under pressure. Given the increase in momentum, the chance of USD dropping to 141.66 has increased as well. Overall, only a breach of 146.50 (‘strong resistance’ level previously at 148.00) would indicate that the current downward pressure has faded.”

The US Dollar (USD) is under pressure, but it does not appear to have sufficient momentum to threaten 141.66, the low registered early this month, UOB Group FX strategists Quek Ser Leang and Peter Chia note.

USD has a small chance to fall towards 141.66 near term

24-HOUR VIEW: “Two days ago, USD traded between 144.44 and 146.59, closing largely unchanged at 145.26 (+0.01%). Yesterday, we indicated that we ‘are not able to glean much out of the price action,’ and we expected USD to trade in a range between 144.40 and 146.50. USD subsequently traded in a 144.84/146.52 range, closing on a firm note at 146.26 (+0.69%). The price movements have resulted in a slight increase in upward momentum. Today, we expect USD to edge higher, but advance is unlikely to break above 147.10. Support levels are at 145.80 and 145.25.”

1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (22 Aug, spot at 145.25). As highlighted, while USD is under pressure, it does appear to have sufficient momentum to threaten 141.66, the low registered early this month. Note that there is another support level at 144.00. On the upside, should USD break above 148.00, it would indicate that the current downward pressure has faded.”

The Japanese Yen (JPY) enters today's risk event with decent momentum, having appreciated over 2% in the past seven days, ING’s FX strategist Francesco Pesole notes.

Markets remain relatively hesitant about a BoJ move by year-end

“Overnight, Bank of Japan Governor Kazuo Ueda maintained a generally hawkish tone in a likely attempt to show independence from the recent turmoil in the Japanese stock market.”

“Further rate hikes are on the table, and the marginal CPI surprise (2.8% vs 2.7% year-on-year) this morning is also helping the hawkish case. Markets remain relatively hesitant about a move by year-end though, with only 10bp priced in by December. We think the chance of a hike is – once again – underpriced.”

“Today, USD/JPY may trade higher on Powell’s cautious tone, but the path forward remains downward-sloping for the pair, in our view, as the pressure on the yen from carry trades looks unlikely to build up again into a Fed cut.”

• USD/JPY loses traction to near 146.20 in Wednesday’s early Asian session. 
• Japan’s CPI inflation continued to rise in July, adding to expectations for another BoJ rate increase.
• Fed’s Collins said it will soon be appropriate to begin cutting rates. 

The USD/JPY pair trades on a weaker note near 146.20 during the early Asian session on Friday. The Japanese Yen (JPY) edges higher after the release of National Consumer Price Index (CPI) inflation data and the Bank of Japan's (BoJ) Governor Kazuo Ueda’s speech. Traders will closely watch US Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Symposium later on Friday. 

Data released by the Japan Statistics Bureau on Friday revealed that the country’s headline National CPI climbed 2.8% YoY in July, compared to 2.8% in June. Meanwhile, Core inflation, which strips out prices of fresh food, came in at 2.7% YoY in the same report period versus 2.6% prior, This figure was in line with the market expectation and may have revitalized the BoJ's interest rate-hike case, which lifts the JPY against its rivals 

The so-called “core-core” inflation rate, which strips out prices of both fresh food and energy, fell to 1.9% YoY in July from 2.2% in June. This figure registered the lowest level since September 2022.

Additionally, the hawkish comments from BoJ’s Governor Ueda boost the JPY broadly. The BoJ Governor Kazuo Ueda said on Friday that the Japanese economy is moving in line with price target protections. Ueda added that the central bank expects to adjust policy if economy moves as planned.

On the other hand, markets expect the Fed to begin easing policy in its September meeting. Minutes released on Wednesday indicated that the majority of Fed members support a rate cut in the upcoming meeting next month. Investors are now pricing in around 76% odds of a 25 basis points (bps) Fed rate cut in its September meeting, according to the CME FedWatch Tool. Markets see a full percentage point worth of rate cuts anticipated by the end of this year. 

On Thursday, Federal Reserve Bank of Boston President Susan Collins stated that it will soon be appropriate to begin cutting rates, adding that incoming data will guide the pace of rate cuts. Kansas City Fed President Jeff Schmid noted Thursday that he was looking more closely at the dynamics behind the increase in the unemployment rate and would let data guide his decision on whether to support a rate reduction next month. The attention will shift to the the Fed’s Powell speech later on Friday, which could give some hints about the US interest rate path.