Search ForexCrunch
  • Japan’s core CPI rose to its highest level in seven and a half years.
  • BoJ is expected to maintain its ultra-loose monetary policy.
  • In the charts, bulls are heading for 137.431.

Today’s USD/JPY forecast is bullish as the BoJ remains adamant about keeping rates low despite rising inflation. Fuel and raw material prices drove Japan’s core consumer inflation to its most substantial rate in July seven and a half year, raising living expenses for households that have yet to see significant salary increases.

-Are you looking for automated trading? Check our detailed guide-

The so-called “core-core” index, which eliminates the influence of volatile fresh food prices and energy prices, increased in July at the fastest annual pace in more than six years as an indication of expanding pricing pressure.

The Bank of Japan (BOJ) is expected to be an outlier in maintaining ultra-loose monetary conditions even though inflation has exceeded its 2% target for four consecutive months. Price increases in Japan remain low relative to other major countries.

Yoshimasa Maruyama, the chief market economist at SMBC Nikko Securities, stated that food costs and a weak yen were the key culprits behind increasing inflation. He anticipates core consumer inflation to hit 3% this year.

He predicted that the BOJ would maintain its current course of action through the fiscal years 2023 and 2024. “As wage growth undershoots inflation, price hikes will weigh on real earnings, limiting household spending power ahead,” he added.

BOJ Governor Haruhiko Kuroda has emphasized that the central bank’s enormous stimulus program will not end until consumer demand increases. The worst is not yet over for the yen.

USD/JPY key events today

The Commodity Futures Trading Commission’s weekly Commitments of Traders report contains a breakdown of the net positions for speculative traders in U.S. futures markets. USD/JPY investors today will pay attention to the change in yen and dollar net positions.

USD/JPY technical forecast: Set to retest resistance at 137.431

USD/JPY forecast

The 4-hour chart shows the price trading above the 30-SMA and the RSI in the overbought region. It is a sign that the trend is bullish and strong. The price has broken above a solid resistance level at 135.426 and is moving steeply toward the next resistance level at 137.431.

-Are you looking for forex robots? Check our detailed guide- 

This trend will continue if the price stays above the 30-SMA and the RSI trades above 50.

Looking to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.