The Japanese Yen has experienced a decline after the recent release of consumer inflation figures from Tokyo, with the currency struggling to maintain momentum against the US Dollar. This comes amid ongoing uncertainty as traders await Japan’s general election. The Yen faced fresh selling pressure, stalling any recovery attempts made in the previous session.
Recent data indicated that Japan’s manufacturing and services sectors contracted in October, further complicating the outlook for the Yen. Additionally, Tokyo’s core inflation rate dipped below the Bank of Japan’s target of 2%, which diminishes expectations for any immediate rate hikes in 2024. The combination of these factors has resulted in increased pressure on the Yen, prompting a cautious market atmosphere.
Against this backdrop, the US Dollar has shown resilience, halting its overnight decline from a multi-month high. The positive risk sentiment in the market has undermined the Yen’s status as a safe haven, while renewed interest in US Dollar buying has provided crucial support for the USD/JPY pair, which is currently positioned in the mid-151.00s range. However, interventions by Japanese officials aim to stabilize the Yen and limit substantial declines.
The Statistics Bureau reported a 1.8% year-over-year rise in the Tokyo Consumer Price Index for October, down from 2.2% the previous month. Core CPI, which excludes volatile food prices, also rose by 1.8%, slightly beating expectations. This drop in inflation raises questions about the Bank of Japan’s interest rate strategy, contributing to prevailing uncertainty as the election approaches.
Looking ahead, upcoming US economic data on durable goods orders and consumer sentiment is anticipated to influence market dynamics. A technical analysis suggests that the USD/JPY could face significant levels of support and resistance in the near term, especially around the pivotal 150.65 mark. A break below this point might indicate a shift in momentum, while movement above 152.00 could see the pair targeting higher levels, potentially reaching the 154.00-mark in subsequent trading sessions.
