Japan data dump won’t help the Yen; USD/JPY
If the data dump later comes out as expected, will the BOJ turn less dovish? It's unlikely.
Share this:
In a few hours, Japan will release a plethora of data for June, including Industrial Production, Retail Sales, and the Unemployment Rate. All are expected to be slightly better than the May data. In addition, Japan will release Tokyo CPI for July. This is often used as a proxy for overall inflation as so much of it makes up Japan’s CPI print. This is also expected to be slightly higher than the June reading of 2.3%. If the data dump today comes out as expected, will the BOJ turn less dovish? It's unlikely. At the July BOJ meeting on July 21st, the central bank left rates at -0.1%, said that it would continue to buy as many 10-year JGBs as necessary to keep yields below 0.25%, and continue with its YCC program. And although the Committee raised its 2022 inflation forecast to 2.5% from 1.9%, the BOJ reiterated that would not hesitate to take extra easing measures if needed. In addition, earlier today BOJ Deputy Governor Amamiya said “we must not loosen our grip in keeping policy easy as there is not prospect yet of sustainably meeting the 2% inflation target”!
USD/JPY began trading aggressively on March 11th, when price broke above 116.35. The pair moved to a high of 131.35 on May 9th and then pulled back in a corrective, descending wedge as the diverging RSI moved from overbought back to neutral territory. USD/JPY broke out of the descending wedge on May 31st, near 127.51, and resumed its move higher. The pair went on to trade at its highest level since September 1998 at 139.39. Notice that at the time, the RSI was overbought and diverging with price. Since then, USD/JPY has been moving lower as the RSI moved back into neutral territory. Could price be forming another descending wedge? Notice on the first wedge how price pulled back to the 50% retracement level from the lows of March 31st to the highs of May 9th.
Source: Tradingview, Stone X
On a 240-minute timeframe, USD/JPY began moving lower from the July 14th highs at 139.39 in a descending wedge formation. Thus far, the pair has pulled back to the 38.2% Fibonacci retracement level from the lows of May 24th to the highs of July 14th, near 134.41. If price is to follow a similar pattern as the first descending wedge and trade down to the 50% retracement level, it would target 132.87. That now acts as the first level support. Below there, USD/JPY could fall to the 61.8% Fibonacci level from the same timeframe at 131.33. Notice that the RSI on the 240-minute timeframe is oversold, indicating the pair may be ready for a bounce. If the pair moves higher, first resistance is at the lows from July 22nd at 135.57. Above there is the downward sloping trendline of the wedge near 137.20 and then the recent highs at 139.39.
Source: Tradingview, Stone X
USD/JPY has been moving lower over the last couple of weeks. However, this probably has more to do with falling US yields than the strength of the Yen. The BOJ recently stated that it will take extra easing measures if necessary. Will stronger economic data due out from Japan shortly help the Yen continue to strengthen? It seems unlikely as USD/JPY is moving based more on the US Dollar rather than the JPY. But, if the pair reaches support at the 50% retracement level near 132.87 as it did in the previous descending wedge, watch for the pair to bounce!
In a few hours, Japan will release a plethora of data for June, including Industrial Production, Retail Sales, and the Unemployment Rate. All are expected to be slightly better than the May data. In addition, Japan will release Tokyo CPI for July. This is often used as a proxy for overall inflation as so much of it makes up Japan’s CPI print. This is also expected to be slightly higher than the June reading of 2.3%. If the data dump today comes out as expected, will the BOJ turn less dovish? It's unlikely. At the July BOJ meeting on July 21st, the central bank left rates at -0.1%, said that it would continue to buy as many 10-year JGBs as necessary to keep yields below 0.25%, and continue with its YCC program. And although the Committee raised its 2022 inflation forecast to 2.5% from 1.9%, the BOJ reiterated that would not hesitate to take extra easing measures if needed. In addition, earlier today BOJ Deputy Governor Amamiya said “we must not loosen our grip in keeping policy easy as there is not prospect yet of sustainably meeting the 2% inflation target”!
Everything you need to know about the Bank of Japan
USD/JPY began trading aggressively on March 11th, when price broke above 116.35. The pair moved to a high of 131.35 on May 9th and then pulled back in a corrective, descending wedge as the diverging RSI moved from overbought back to neutral territory. USD/JPY broke out of the descending wedge on May 31st, near 127.51, and resumed its move higher. The pair went on to trade at its highest level since September 1998 at 139.39. Notice that at the time, the RSI was overbought and diverging with price. Since then, USD/JPY has been moving lower as the RSI moved back into neutral territory. Could price be forming another descending wedge? Notice on the first wedge how price pulled back to the 50% retracement level from the lows of March 31st to the highs of May 9th.
Source: Tradingview, Stone X
Trade USD/JPY now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute timeframe, USD/JPY began moving lower from the July 14th highs at 139.39 in a descending wedge formation. Thus far, the pair has pulled back to the 38.2% Fibonacci retracement level from the lows of May 24th to the highs of July 14th, near 134.41. If price is to follow a similar pattern as the first descending wedge and trade down to the 50% retracement level, it would target 132.87. That now acts as the first level support. Below there, USD/JPY could fall to the 61.8% Fibonacci level from the same timeframe at 131.33. Notice that the RSI on the 240-minute timeframe is oversold, indicating the pair may be ready for a bounce. If the pair moves higher, first resistance is at the lows from July 22nd at 135.57. Above there is the downward sloping trendline of the wedge near 137.20 and then the recent highs at 139.39.
Source: Tradingview, Stone X
USD/JPY has been moving lower over the last couple of weeks. However, this probably has more to do with falling US yields than the strength of the Yen. The BOJ recently stated that it will take extra easing measures if necessary. Will stronger economic data due out from Japan shortly help the Yen continue to strengthen? It seems unlikely as USD/JPY is moving based more on the US Dollar rather than the JPY. But, if the pair reaches support at the 50% retracement level near 132.87 as it did in the previous descending wedge, watch for the pair to bounce!
Learn more about forex trading opportunities.
Related tags:
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold Q4 2026 outlook: Resilience in the face of rallying dollar and yields
As we headed towards the latter stages of Q3 and into Q4, the Fed had just hiked rates in a hawkish FOMC meeting, while the likes of the ECB and BoJ had also tightened their respective policies. Oil prices remained elevated amid the prolonged US-Iran conflict. Meanwhile, bond yields were breaking out, and the dollar was higher across the board. Yet, remarkably, gold was still holding in the positive territory for the third quarter, even if it had weakened somewhat in September.
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.
USD/JPY Q4 2026 Outlook: Hawkish Fed Pricing Clashes With Intervention Risk
The year-end tug-of-war is clear: hawkish Fed pricing supports USD/JPY, while intervention risk limits the upside.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.