• Ahead of a batch of crucial US economic data, the Japanese Yen traded around 144 Yen against the US Dollar, hovering near its strongest levels in three weeks.
• This comes as the prospect of interest rate cuts by the Federal Reserve continues to weigh on the US Dollar while other major currencies have benefited.
• Federal Reserve officials have sounded the alarm about Labor market risks while expressing confidence that US inflation will return to the target level, indicating a readiness to cut borrowing costs soon.

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In contrast, Bank of Japan Governor Kazuo Ueda told parliament last week that the BOJ could adjust monetary policy if its economic outlook holds, signaling a willingness to raise interest rates again. BOJ Deputy Governor Ryozo Himeno echoed that sentiment this week, saying the central bank would raise rates if the economy and prices continued on their current path.

On the stock trading front, Japanese stocks rose as Nvidia earnings awaited. The Nikkei 225 index of Japanese shares rose 0.22% to close at 38,372, while the broader TOPIX index rose 0.42% to close at 2,692 on Wednesday. Furthermore, Japanese stocks rose for a second straight session as investors looked ahead to Nvidia’s earnings report that could fuel a further rise in technology and artificial intelligence. Also, local stocks benefited from a weaker yen as investors continued to assess the Bank of Japan’s monetary policy outlook. Recently, BOJ Deputy Governor Ryozo Himino said the central bank would adjust the degree of monetary easing if the outlook for economic activity and prices improves. Strong performances were seen from index heavyweights Toyota Motor Corp (3.9%), Disco Corp (1.4%), Advantest (4.2%), Sony Group (2.3%) and Hitachi (2.5%). Additionally, Rakuten Group shares rose 9.2% after Morgan Stanley and Citi raised their price targets for the Japanese technology company.

On the economic front, Japan’s index of coincident economic indicators, which covers a range of data such as factory output, employment and retail sales, was revised down to 113.2 in June 2024 from a preliminary reading of 113.7. The figures followed May’s reading of 117.1, indicating the lowest level since February while maintaining a “stop falling” assessment, as the economy continues to recover moderately despite growing global headwinds, particularly from China, the US and Europe.

Meanwhile, Japanese consumer prices are expected to rise after energy subsidies were fully ended in May while the Bank of Japan has begun to consider policy normalization amid a weaker currency.
 

USD/JPY Technical Analysis and Expectations Today

According to the performance on the daily chart, the general trend of the USD/JPY price is still bearish. Also, investors do not care about the technical indicators moving towards strong oversold levels as much as they care about what is being said by global central bank officials regarding the future of raising interest rates or not. Currently, the closest important support levels for trading the USD/JPY are 142.60 and 141.00 respectively. Today's US economic data: GDP growth and weekly jobless claims.

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