The USD/JPY pair is facing resistance after reaching the 143.00 level, with BoJ Tamura’s hawkish comments boosting the JPY and putting pressure on the pair. Despite a slight increase in USD demand and positive market sentiment, the pair is struggling to maintain its recovery from a recent low.
Recent data shows that while US consumer prices are easing, core CPI remains steady, reducing expectations for a large Fed rate cut. This has helped the USD gain strength and move closer to recent highs. Additionally, the risk-on sentiment in the market has weakened the JPY, supporting the USD/JPY pair.
However, Japan’s Producer Price Index unexpectedly declined in August, putting further pressure on the JPY. BoJ’s Naoki Tamura’s comments hinting at a slow end to easy policies have kept hopes alive for a rise in borrowing costs by year-end, limiting JPY losses.
As the market anticipates a 25 bps Fed rate cut, the diverging policies between the Fed and BoJ are causing selling pressure on the USD/JPY pair. Traders are now awaiting the US PPI data for direction, but the overall outlook suggests a downward trend for the pair.
Analysis:
The USD/JPY pair is struggling to maintain gains as hawkish remarks from BoJ officials and diverging monetary policies between the Fed and BoJ weigh down on the pair. While positive market sentiment and a slight increase in USD demand have provided some support, the overall trend suggests a potential downside for the pair. Traders should monitor upcoming economic data and central bank decisions for further direction on the USD/JPY pair.