Japanese Yen Firms Up Against Weakening US Dollar Ahead of Key US PCE Data

Japanese Yen Firms Up Against Weakening US Dollar Ahead of Key US PCE Data

The Japanese Yen (JPY) recovered intraday losses on Friday, staying close to a 10-day high versus the US Dollar (USD). The dip-buying in JPY comes despite a softer Tokyo Consumer Price Index (CPI) and weak Retail Sales figures, as expectations rise that the Bank of Japan (BoJ) may still hike interest rates to tame inflation.

USD/JPY Snapshot:

• Current Price: ~157.35
• Recent High: 157.80 (Thursday)
• Trend Bias: Bearish

BoJ Rate Hike Bets Support the Yen

While inflation in Tokyo came in below expectations, investors remain confident that Japan's central bank is still on course to normalize its monetary policy. Persistent inflationary pressures and prior signals from the BoJ about future tightening give the Yen a bullish undertone.

🇺🇸 US Dollar Weakness Deepens

Meanwhile, the US Dollar Index (DXY) hovers near its March 2022 lows, putting downward pressure on the USD/JPY pair. Traders are turning defensive ahead of the release of the US May Personal Consumption Expenditures (PCE) Price Index, which could guide the Federal Reserve’s next rate move. Speculation about a potential rate cut by year-end keeps sentiment against the Greenback.

Market Sentiment and Safe-Haven Flows

The overall risk-positive tone in global markets and concerns about the broader economic cost of US tariffs are limiting any significant upside in USD/JPY. As such, the safe-haven Yen remains attractive, especially heading into high-impact US data.

Key Levels to Watch:

• Support: 156.70 / 156.00
• Resistance: 157.90 / 158.40
• Bias: Bearish below 158.00

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