USD/JPY volatile with markets assessing US core CPI and BOJ decision

• The pair approached 150.00 after four consecutive days of losses.
• USD/JPY gave back earlier gains after the BOJ’s Monetary Policy Statement reaffirmed its ultra-loose policy.
• US core CPI eased to 4.1% yoy in June, fueling a decline in US yields.

At the time of writing these lines, the pair USD/JPY It is trading near the 150.00 zone, 1% above its opening price, after hitting a daily low of 138.05. The US dollar, as measured by the DXY, is trading relatively flat at the end of the week after being pressured lower by weak Core Personal Consumption Expenditure (PCE) numbers for June.

On that note, US Treasury yields are declining behind core PCE pulling back to 4.1% disappointing expectations as Jerome Powell stated clearly that ongoing decisions will depend on incoming data. However, the Federal Reserve (Fed), until the next meeting in September, will obtain two additional sets of inflation figures and employment reports that will model the adjustment expectations.

However, the bullish trajectory of the pair is explained because the markets consider the Bank of Japan’s monetary policy decision to be moderate. No hikes were announced or hinted at, but it did conclude with an unexpected tightening of the yield curve control. Regarding Governor Ueda’s comments, he stated that the decision was not a step towards normalization, as the bank is still far from being able to raise rates in the short term, and its dovish stance appears to be weakening the Yen.

USD/JPY levels to watch

Resistance levels: 140.93 (20-day SMA), 141.50, 142.00.
Support levels: 138.70, 138.00, 137.40 (100-day SMA).

USD/JPY Daily Chart