USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | -0.56% | -81 Pips |  |
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| Week to-date | -1.09% | -159.4 Pips |  |
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| June | 0.3% | 43.9 Pips |  |
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Upcoming key events (London Time)
Fri 12:30 AM JPY Tokyo CPI (Inflation Rate) (12-mth)
Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth) Fri 09:30 PM USD Bank Stress Test Results
What happened lately
In Japan, economic indicators reflect a modest slowdown in retail activity as the Large Retailer Sales for May 2025 decreased to 2% from 3.3% in April. The retail trade’s seasonal adjustment also witnessed a decline to -0.2%, down from a previously revised 0.7%. Annually, retail trade growth in May fell to 2.2% from a revised 3.5% in April, highlighting a deceleration in consumer spending. Additionally, inflation rates in Tokyo, including CPI excluding fresh food and energy, decreased to 3.1% from previous levels, indicating a softening in price pressures. Fortunately, Japan’s unemployment rate remained steady at 2.5% in May, indicating stability in the job market despite the other declines.
In the United States, the economic picture was more mixed. U.S. Pending Home Sales improved by 1.8% in May compared to a previous decline of 6.3% in April, signaling a recovery in the housing market. U.S. Initial Unemployment Insurance Claims dropped to 236K, suggesting robust labor market conditions. Durable Goods Orders experienced significant growth across various categories, with New Orders rising by 16.4%, excluding defense up by 15.5%, and excluding transportation reporting an increase of 0.5%. However, the GDP for the first quarter of 2025 fell to an annual rate of -0.5% from -0.2% in the fourth quarter of the previous year, marking a contraction in economic output. The PCE Price Index showed a slight increase to 3.7% for Q1 2025, indicating continued inflationary pressures. New-home sales substantially decreased by 13.7% in May after a sharp rise in April, highlighting the volatility in the real estate sector.
Regarding the USDJPY currency pair, the news from both countries could have contrasting effects on its movement. Japan’s softening inflation data along with a stable unemployment rate are likely to keep the Bank of Japan’s monetary policy steady, reducing the likelihood of policy-driven yen appreciation. In the U.S., the combination of strong durable goods orders and a low unemployment rate supports a robust economic environment, potentially favoring the U.S. dollar. Nonetheless, the GDP contraction poses a risk to the dollar, creating mixed signals. As a result, given the current economic indicators, USDJPY might remain unstable in its recent fluctuations. Upcoming events, such as the Tokyo CPI, U.S. PCE Price Index excluding food and energy, and Bank Stress Test results, could further influence its trajectory.
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What can we expect from USDJPY today?
USDJPY on Thursday dropped -0.56% to 144.36. Price is below 9-Day EMA while Stochastic is falling in oversold zone.
Updated daily direction for USDJPY looks bearish as the pair posted lower in Thursday trading session.
Looking ahead for the day, immediate support level is at 143.65 (S1) with break below could see further selling pressure towards 142.94 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 145.26 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 143.75 would indicate selling pressure.
For the week to-date, take note that USDJPY is mixed as compared to prior week.
Key levels to watch out:
| R3 | 146.68 |
| R2 | 145.97 |
| R1 | 145.16 |
| Daily Pivot | 144.46 |
| S1 | 143.65 |
| S2 | 142.94 |
| S3 | 142.13 |