The pair is down 0.4% to 147.12 currently, lingering at the lows for the day as we look towards European trading. This comes after a modest rebound yesterday, which came as the dollar pushed back up after the US PPI report hinted at some inflation concerns. The greenback is continuing to hold steadier but the yen is on the move today after Japan Q2 GDP data was stronger than estimated here.
USD/JPY 4-hourly chart
Amid the drop yesterday, the pair did take out minor support around 147.61-70 before buyers intervened after the US data. As such, that will remain a notable technical point again to any further downside move today.
As much as the data from Japan does bolster conditions for a BOJ rate hike, the final say still rests on policymakers and they’re not going to be explicit about their intentions just yet.
Traders are slowly trying to push the idea of a December rate hike but there is still quite some time before that. So, we’ll have to see how the BOJ wants to communicate this as the data starts to afford them some leeway in being a little more bold. But knowing the BOJ, they won’t pre-commit to anything until they are 100% certain of that being the move they want to make.
That means we could just be stuck in this limbo for a while until October or November. As things stand, traders are pricing in ~18 bps of rate cuts by year-end.
Going back to USD/JPY, the big picture still shows price action resting in between the 100 and 200-day moving averages of 145.49 and 149.24 respectively. That is defining the rangebound play for the pair since July, barring the failed breakout of 150.00 before the US jobs report.