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USD/JPY steadies below 159.50 as soft US inflation weighs on Fed hike hopes
Cooling US inflation expectations are keeping the Federal Reserve from an immediate move, while Bank of Japan tightening bets help limit upside in the pair.
The USD/JPY pair is trading with a mild negative bias below the mid-159.00s during Friday’s Asian session, after sitting near a nearly two-week high reached the previous day, FXStreet reports.
FXStreet attributes the softer near-term USD outlook to cooling US inflation data, which has tempered expectations for an immediate interest-rate hike by the Federal Reserve, keeping the US dollar under pressure.
On the other side of the pair, the Japanese yen is supported by bets for further policy tightening by the Bank of Japan, though FXStreet notes Japan’s borrowing costs remain much lower than in the US, keeping the JPY carry trade active.
Technically, FXStreet says the rebound from the 155.25-155.20 area stalls near the 50% Fibonacci retracement level of an intervention-led slump, with upside gains seen as potentially capped by resistance around 159.85 and support initially around 158.58 before 157.30 and the structural floor near 155.23.
Latest closeUSD/JPY 159.49 ▲0.1%