USD/JPY experiences a decline, retreating beneath 158.30 following a rejection at the 200-day SMA, which stands at 158.56. Softer-than-expected Japanese producer prices are preventing the JPY from appreciating further. The US Dollar remains stable as investors anticipate significant US inflation reports set to be released later this week. The US Dollar edges lower against the Japanese Yen on Tuesday, although it maintains its broader bullish trend intact, favoured by a risk-averse market. The USD/JPY bulls encountered resistance at the 200-day SMA, situated around the 158.50 mark, once more on Monday. Consequently, the pair retraced during the early trading session on Tuesday, dipping to session lows below 158.30.
Data from Japan released earlier on Tuesday indicated an unforeseen deceleration in factory inflation, with September’s Producer Prices Index contracting 0.3% for the second consecutive month, contrary to market expectations of a 0.5% increase. Year-over-Year, Japan’s PPI increased at a rate of 6.9%, falling short of expectations for a consistent 7.6% rate. Nonetheless, this remains at levels that exert pressure on the Bank of Japan to further tighten its monetary policy. Subsequently, BoJ Governor Kazuho Ueda noted that underlying inflation is approaching 2% and reiterated the bank’s dedication to maintaining it at those levels, thereby leaving the possibility for additional interest rate increases open. The Yen, however, exhibited minimal movement in response to Ueda’s comments.
The US Dollar has been exhibiting a moderately softer tone during the Asian session, coinciding with the return of US markets following a partial closure on Monday. Investors are expected to adopt a cautious stance on Tuesday, as they await the upcoming US Consumer Price Index and Producer Price Index figures later in the week, which may provide additional insights regarding the timing of the Federal Reserve’s next rate hike. USD/JPY trades at 158.30, maintaining a generally positive outlook thus far, although upward movements are constrained beneath the 200-day simple moving average at 158.56.
The Relative Strength Index in the daily chart lies around 55, and the Moving Average Convergence Divergence is slightly positive; however, the pair appears to require new impetus to surpass the upper boundary of its range. Immediate resistance is observed at the specified SMA of 158.56, which obstructs the trajectory toward the September 24 high near 159.00 and the significant 160.00 region. On the downside, the lows from October 6 and 8 in the vicinity of 157.50 are expected to challenge bearish sentiment prior to the late September lows at 156.38 and the low from September 17 at 155.34.
