The USD/JPY pair moderated its rise on Friday, finding stability around 149.69 – near its lowest point in almost two months. The yen continued to face pressure due to the overall strength of the US dollar, driven by strong economic data that moderated expectations for significant easing by the Federal Reserve.
Recent figures highlighted the strength of the US economy: weekly jobless claims decreased to 218,000, and second-quarter GDP growth was adjusted upward to 3.8% year-on-year, representing the quickest rate in almost two years. In Japan, the data presented a blend of signals. Core inflation in Tokyo remained unchanged at 2.5% in September, consistent with the August figure but below the anticipated 2.8%.
The minutes from the Bank of Japan’s July policy meeting indicated that certain members are leaning towards additional rate hikes, depending on the alignment of economic and inflation trends. Although rates remained steady in September, the presence of two dissenting votes indicates that monetary tightening could be on the horizon sooner than expected. USD/JPY is pausing after its recent surge, caught in the balance between a robust US dollar and increasing speculation regarding a more aggressive stance from the BoJ.
The current technical outlook indicates that a corrective pullback is probable, potentially providing a stronger base for the subsequent upward movement. Market participants will be attentive to more definitive indications from both central banks to ascertain the pair’s forthcoming sustained movement.