The Japanese Yen (JPY) saw a decline in Friday’s New York session following the release of weaker National Consumer Price Index (CPI) data by the Statistics Bureau of Japan. The annual inflation rate dropped to 2.5% in April from 2.7% in the previous month, marking the second consecutive month of moderation but still above the Bank of Japan’s (BoJ) 2% target. This sustained inflation puts pressure on the central bank to consider further policy tightening.
The Bank of Japan has stressed the importance of achieving stable growth and hitting the 2% price target, along with robust wage growth, in order to normalize policy. There are expectations among investors that the ongoing weakness of the JPY may prompt the BOJ to accelerate its next interest rate hike to combat the impact on the cost of living.
Despite a hawkish sentiment surrounding the Federal Reserve (Fed) and its commitment to maintaining higher policy rates for an extended period, the US Dollar (USD) failed to hold onto gains. This sentiment was reinforced by the release of higher-than-expected United States (US) Purchasing Managers Index (PMI) data on Thursday.
In terms of market movements, the Japanese Yen continues to extend losses as soft CPI data raises concerns over the BoJ’s plans to tighten policy further. Japan’s Core CPI (YoY) excluding fresh food but including fuel costs, rose 2.2% in April as expected, showing a slowdown for the second consecutive month compared to March’s reading of 2.6%.
The US Dollar/Japanese Yen (USD/JPY) pair is currently trading near 157.00, with technical analysis indicating a potential bearish reversal as the pair approaches a rising wedge pattern on the daily chart. The 14-day Relative Strength Index (RSI) remains above 50, signaling continued bullish momentum. The pair may retest the upper boundary of the rising wedge at around 157.20, with immediate support at the nine-day Exponential Moving Average (EMA) at 156.33.
Overall, the Japanese Yen’s price today shows weakness against the Euro, as indicated in the percentage change table of major currencies. The heat map illustrates the percentage changes of major currencies against each other, providing a snapshot of currency movements in the market.