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USD/JPY holds below key 20-day EMA near 159 as bias stays bearish

Japan’s CPI excluding fresh food came in at 1.8% year over year in July, reinforcing expectations for tighter Bank of Japan policy and weighing on the dollar-yen outlook.

Reported · Written up by our desk · Major Pairs

USD/JPY was trading around 158.98 to 159.00 during Asian hours on Friday, consolidating in a tight range as the pair remained capped below the 20-day exponential moving average at 159.59. FXStreet said the spot rate’s positioning under that short term trend level keeps a bearish near-term tone in place.

FXStreet noted that both the yen and the US dollar were underperforming versus other currency peers, but argued the Japanese currency could fare better if the Bank of Japan keeps policy tight. The outlet also pointed to expectations around US Treasury efforts to increase debt repayment, saying that could keep pressure on the dollar.

In the data backdrop, Japan’s July CPI excluding fresh food was reported by the Statistics Bureau of Japan to have risen 1.8% year over year, up from 1.6% in June, which FXStreet said strengthens market interest rate hike expectations for the BoJ.

On the technical side, FXStreet highlighted the August 20 low near 158.00 as the key supply level and the August 7 low at 156.68 as the next downside reference, while a sustained break above 159.59 would be needed to ease the downside bias and support a stronger recovery.

Latest closeUSD/JPY 159.31 ▼0.1%

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