USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | 0.26% | 37.7 Pips |  |
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| Week to-date | 0.88% | 127.4 Pips | |
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| June | 0.92% | 132 Pips | |
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Upcoming key events (London Time)
No major events for the day.
What happened lately
In Japan, the National Consumer Price Index (CPI) in May 2025 showed a slight decrease in inflation, with the overall CPI inflation rate dropping to 3.5% from 3.6% in April. However, when excluding fresh food and energy, inflation increased to 3.7% and 3.3%, respectively. This mixed picture suggests different dynamics affecting consumer prices where core inflation indicators show rising underlying inflation pressure, possibly due to energy pricing or exchange rate fluctuations. Additionally, Japan’s Merchandise Trade Balance showed signs of improvement in the adjusted balance, moving to -305.5¥ from -408.91¥ in April. However, the total balance worsened significantly to -637.6¥ from -115.6¥. This was compounded by a decrease in both import and export growth rates, highlighting declining trade activity and potential economic slowdown.
In the United States, the Federal Reserve’s interest rate projections showed slight increases in the rates for the first two years of the forecast horizon, with the first year rising to 3.6% from 3.4%, and the second year to 3.4% from 3.1%. The Federal Funds Rate decision remained unchanged at 4.5%. Meanwhile, Initial Unemployment Insurance Claims fell slightly to 245K from a revised figure of 250K, reflecting a possibly stable labor market. Housing indicators showed a decline in building permits and housing starts, indicating a downturn in construction activities, with permits dropping to 1.393M in May from 1.422M in April and housing starts decreasing to 1.256M from 1.392M. These figures suggest potential cooling in the housing market, possibly due to higher interest rates weighing on mortgage affordability.
The fluctuations in economic indicators in both Japan and the U.S. have implications for the USD/JPY exchange rate. The rise in U.S. interest rate projections generally supports the strength of the U.S. dollar as higher interest rates typically attract foreign investment. However, the disappointing housing market data could mitigate this impact slightly. On the other hand, Japan’s mixed inflation data along with a worsening trade balance might pressure the yen. As seen, USDJPY rose 0.26% to 145.43 in what could be a reaction to these dynamics, indicating a consolidation within the currency pair. Without significant economic events slated, the focus may remain on policy expectations and future inflation trends to influence the pair’s movement.
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What can we expect from USDJPY today?
USDJPY on Thursday rose 0.26% to 145.43. Price is above 9-Day EMA while Stochastic is falling in overbought zone.
Updated daily direction for USDJPY looks mixed as the pair is likely to consolidate above 144.85 (S1).
Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 145.77 or trades above daily pivot 145.31. While to the downside, the daily low of 144.73 and 144.85 (S1) as immediate support levels. USDJPY need to break on either side to indicate a short-term bias. A break above 145.77 would suggest bullish bias after recent positive movement.
For the week to-date, take note that USDJPY is mixed as compared to prior week.
Key levels to watch out:
| R3 | 146.93 |
| R2 | 146.35 |
| R1 | 145.89 |
| Daily Pivot | 145.31 |
| S1 | 144.85 |
| S2 | 144.27 |
| S3 | 143.82 |