Japan Core Inflation Turns Negative Yen Strengthens
Falling energy costs and a slowdown in economic activity are depressing prices, stirring worries about a come-back of deflation...
Share this:
As expected, the Bank of Japan today kept its key interest rate unchanged at Negative -0.100%.
At the same time, the central bank announced the launch of a new lending program worth 30 trillion yen to support small businesses hit hard by the coronavirus pandemic.
This new program, which funnel money to companies via commercial banks and other financial institutions, will bring the BOJ's coronavirus response measures to 75 trillion yen.
In fact, before the central bank's announcement, Japan's official data showed that Core Consumer Prices contracted 0.2% on year in April (-0.1% expected, +0.4% in March), the first Negative reading since 2016. Falling energy costs and a coronavirus-induced slowdown in economic activity are depressing prices, stirring worries about a come-back of deflation.
Source: Trading Central
Meanwhile, the Japanese yen has regained some strength against the U.S. dollar.
On an Intraday 30-minute Chart, USD/JPY rebounded to an Overhead Resistance at 107.85 yesterday before retreating.
Source: GAIN Capital, TradingView
Currently USD/JPY has returned to levels below the 20-period moving average, which has just crossed below the 50-period one.
And the relative strength index has not yet recovered the neutrality level of 50, suggesting a lack of upward momentum for the pair.
The technical configuration points to continued downside pressure.
The level of 107.85 (the high of yesterday) is acting as a key resistance.
Unless this level is surpassed, USD/JPY is expected to seek Downside Support at 107.35 and 107.20.
At the same time, the central bank announced the launch of a new lending program worth 30 trillion yen to support small businesses hit hard by the coronavirus pandemic.
This new program, which funnel money to companies via commercial banks and other financial institutions, will bring the BOJ's coronavirus response measures to 75 trillion yen.
In fact, before the central bank's announcement, Japan's official data showed that Core Consumer Prices contracted 0.2% on year in April (-0.1% expected, +0.4% in March), the first Negative reading since 2016. Falling energy costs and a coronavirus-induced slowdown in economic activity are depressing prices, stirring worries about a come-back of deflation.
Source: Trading Central
Meanwhile, the Japanese yen has regained some strength against the U.S. dollar.
On an Intraday 30-minute Chart, USD/JPY rebounded to an Overhead Resistance at 107.85 yesterday before retreating.
Source: GAIN Capital, TradingView
Currently USD/JPY has returned to levels below the 20-period moving average, which has just crossed below the 50-period one.
And the relative strength index has not yet recovered the neutrality level of 50, suggesting a lack of upward momentum for the pair.
The technical configuration points to continued downside pressure.
The level of 107.85 (the high of yesterday) is acting as a key resistance.
Unless this level is surpassed, USD/JPY is expected to seek Downside Support at 107.35 and 107.20.
As expected, the Bank of Japan today kept its key interest rate unchanged at Negative -0.100%.
At the same time, the central bank announced the launch of a new lending program worth 30 trillion yen to support small businesses hit hard by the coronavirus pandemic.
This new program, which funnel money to companies via commercial banks and other financial institutions, will bring the BOJ's coronavirus response measures to 75 trillion yen.
In fact, before the central bank's announcement, Japan's official data showed that Core Consumer Prices contracted 0.2% on year in April (-0.1% expected, +0.4% in March), the first Negative reading since 2016. Falling energy costs and a coronavirus-induced slowdown in economic activity are depressing prices, stirring worries about a come-back of deflation.
Source: Trading Central
Meanwhile, the Japanese yen has regained some strength against the U.S. dollar.
On an Intraday 30-minute Chart, USD/JPY rebounded to an Overhead Resistance at 107.85 yesterday before retreating.
Source: GAIN Capital, TradingView
Currently USD/JPY has returned to levels below the 20-period moving average, which has just crossed below the 50-period one.
And the relative strength index has not yet recovered the neutrality level of 50, suggesting a lack of upward momentum for the pair.
The technical configuration points to continued downside pressure.
The level of 107.85 (the high of yesterday) is acting as a key resistance.
Unless this level is surpassed, USD/JPY is expected to seek Downside Support at 107.35 and 107.20.
At the same time, the central bank announced the launch of a new lending program worth 30 trillion yen to support small businesses hit hard by the coronavirus pandemic.
This new program, which funnel money to companies via commercial banks and other financial institutions, will bring the BOJ's coronavirus response measures to 75 trillion yen.
In fact, before the central bank's announcement, Japan's official data showed that Core Consumer Prices contracted 0.2% on year in April (-0.1% expected, +0.4% in March), the first Negative reading since 2016. Falling energy costs and a coronavirus-induced slowdown in economic activity are depressing prices, stirring worries about a come-back of deflation.
Source: Trading Central
Meanwhile, the Japanese yen has regained some strength against the U.S. dollar.
On an Intraday 30-minute Chart, USD/JPY rebounded to an Overhead Resistance at 107.85 yesterday before retreating.
Source: GAIN Capital, TradingView
Currently USD/JPY has returned to levels below the 20-period moving average, which has just crossed below the 50-period one.
And the relative strength index has not yet recovered the neutrality level of 50, suggesting a lack of upward momentum for the pair.
The technical configuration points to continued downside pressure.
The level of 107.85 (the high of yesterday) is acting as a key resistance.
Unless this level is surpassed, USD/JPY is expected to seek Downside Support at 107.35 and 107.20.
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD weekly outlook: Oil, inflation and NFP in focus
After coming under significant pressure in recent weeks, the EUR/USD came off its lows to finish the week on a positive note on Friday, albeit with only a mild rebound. That was not enough to prevent the exchange rate falling for the third consecutive week, as the US dollar and bond yields rallied across the board.
EUR/USD Q4 2026 Outlook: Euro at a Crossroads as Fed, ECB Tighten 9 25 2026
EUR/USD enters Q4 at a pivotal inflection point as competing Fed-ECB policy paths and persistent inflation risks collide with major technical support.
AUD/USD Q4 Outlook: RBA and Fed Hikes Set the Tone
AUD/USD enters Q4 with RBA and Fed hikes in focus as sticky inflation, rising unemployment and US dollar strength shape the Australian dollar.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.