USD/JPY eased to 157.94 on Friday after a sharp rise, as stronger-than-expected Tokyo inflation data gave the yen support. The pair still heads for a third straight weekly decline, with a wide US-Japan rate differential and resistance at 158.75-158.99 keeping the broader bias lower.
USD/JPY slipped to 157.94 on Friday after a sharp rise the prior session. The yen found support from Tokyo inflation data, with core inflation accelerating to 2.7% in September, exceeding the Bank of Japan's 2% target for the first time in nine months.
BoJ summary offers no clear timing
At the same time, the Bank of Japan's summary of opinions from its September meeting proved less hawkish than expected. The central bank is increasingly focused on the risk of inflation exceeding its target, keeping the prospect of another rate hike before year-end alive, though it gave no clear signal on timing.
Nevertheless, the yen remains on track for a third consecutive weekly decline. A strong US dollar and elevated US Treasury yields continue to weigh on the currency amid expectations the Federal Reserve may keep raising rates as high energy prices add to inflationary pressure. As a result, the US-Japan interest rate differential risks staying wide, with the Fed so far tightening faster than the BoJ.
Resistance holds near 158.75-158.99
On the H4 chart, USD/JPY recovered from the 156.20 area and tested resistance at 158.75-158.99, but buyers failed to hold above the zone, and the pair began consolidating around 157.85. The structure allows for another move higher toward that resistance, where a second test from below looks likely. The MACD indicator stays above zero, but momentum looks limited, suggesting the rise is mainly corrective. A rejection from 158.75-158.99 could trigger a new downward move toward 157.34 and, if broken, 155.60, with 153.50 a further downside target.
Meanwhile, on the H1 chart, following a rise to 158.40, the pair pulled back to resistance at 157.93. The Stochastic oscillator points downward and nears the oversold zone, suggesting a local corrective rise is possible before the decline resumes. A return above 157.93 could open the way toward 158.40 and then 158.63-158.99. However, while resistance at 158.99 remains unbroken, the main scenario envisages the corrective rise completing before a reversal lower, with a break below 157.75 opening the way toward 157.34 and then 155.60.
Source: ActionForex
Trading involves risk.
Risk Disclaimer
