The Japanese Yen experienced a decline following the release of consumer price index data from Tokyo on Friday. The Tokyo Consumer Price Index (CPI) recorded a year-over-year increase of 2.2% in September, a decrease from the 2.6% rise noted in August. This development raised concerns among traders about the Bank of Japan’s approach to interest rates, suggesting that they may hesitate before implementing any further hikes.
In more specific terms, the CPI that excludes fresh food and energy remained steady, reflecting a consistent increase of 1.6% year-over-year in September. Meanwhile, the CPI excluding fresh food indicated an increase of 2.0%, aligning with expectations yet down from August’s 2.4% gain. Meanwhile, the US Dollar faced some downward pressure as remarks from Federal Reserve officials hinted at a more dovish policy outlook. Traders are now keenly awaiting the release of the US Personal Consumption Expenditures (PCE) Price Index data for August, which is the Federal Reserve’s preferred inflation measure, set to be reported later on Friday.
As the market digests the latest economic indicators, the Japanese Yen has been under significant pressure, marking a third consecutive day of losses driven by uncertainties over the Bank of Japan’s policy direction. The minutes from the Bank’s recent Monetary Policy Meeting highlighted a consensus among members regarding the need for vigilance concerning inflation risks. Some members recognized the appropriateness of raising rates to 0.25% to recalibrate monetary support levels.
Simultaneously, US economic data revealed a GDP growth rate of 3.0% for the second quarter, confirming earlier estimates. The initial jobless claims report also showed a drop to 218,000 for the week ending September 20, which was below market forecasts. As these dynamics unfold, USD/JPY trading remains resilient above the 145.00 level, with technical indicators suggesting ongoing bullish trends. Potential resistance levels may emerge around 146.90 and 147.21, while support is anticipated near 143.89, aligned with the ongoing upward channel’s lower boundary.
