The Japanese yen bounces from minimums of several months against the dollar before the Boj’s decision

• The Japanese Yen attracts some buyers in reaction to the optimistic national macroeconomic data.
• Some repositioning operations before the Boj’s decision weigh even more on the USD/JPY torque.
• The fundamental background justifies caution for the JPY bullies before the US PCE data.

The Japanese Yen (JPY) advances slightly against a weaker US dollar (USD) during Thursday’s Asian session and recovers part of the fall of the day before its lowest level since the beginning of April. The data published from Japan earlier today showed that industrial production grew unexpectedly in June, while strong retail sales pointed to resilience in consumer spending. This, together with some repositioning operations before the crucial policy update of the Bank of Japan (BOJ), offers some support to the JPY. Investors will seek signals on how the recent commercial agreement between the US and Japan could influence the intention of the BOJ to increase interest rates before the end of the year.

That said, the recent economic data in Japan indicated signs of inflation cooling. In addition, the growing internal political uncertainty could complicate the path of normalization of BOJ’s policy. Therefore, the attention will focus on the press conference after the meeting, where the comments of the governor of the Boj, Kazuo Ueda, will influence the JPY. The USD, on the other hand, could continue to receive support from the Hard Line tone of the Federal Reserve (FED), which moderated the hopes of a rate cut in September. This could contribute to limit the losses for the USD/JPY torque, justifying caution for the bearish operators for the central bank event and before US inflation data.

The bassists of the Japanese Yen become caution before the crucial policy decision of the BOJ

• A preliminary government report showed this Thursday that industrial production in Japan increased by 1.7% compared to the previous month in June, exceeding consensus estimates and pointing out resilience among manufacturers despite winds against US commercial tariffs.
• A separate report revealed that retail sales in Japan grew for 39th consecutive month, 2.0% year -on -year in June. This marked a slight increase with respect to the growth reviewed of 1.9% of the previous month and also exceeded market expectations.
• The above pointed out that Japanese private consumption remained strong despite the winds against persistent inflation and economic uncertainty. This, together with the commercial agreement between the US and Japan, keeps the hopes of an increase in rates by the Bank of Japan later this year.
• The loss of the Democratic Liberal Party in the July 20 elections fed concerns about Japan’s fiscal health in the midst of opposition calls to increase spending and cut taxes. This suggests that the prospects for amaz increases in the BOJ could be delayed a little more.
• The BOJ is expected to hold the rates without changes at the end of a meeting two days later this Thursday. However, the quarterly perspective report of the Central Bank and the comments of the governor of the Boj, Kazuo Ueda, could offer clues about the hardening trajectory.
• Meanwhile, the US Federal Reserve maintained interest rates without changes on Wednesday in a divided decision that saw two dissident governors for the first time since 1993. In addition, the president of the Fed, Jerome Powell, modeled the hopes of a rate cut in September.
• Going to the reporters during the press conference after the meeting, Powell said it was too early to say if the Fed would cut in its next meeting and that the current moderately restrictive monetary policy has not been stopping the economy.
• This adds to the initial optimism promoted by the optimistic macroeconomic data of the US and pushes the US dollar to its highest level since the end of May. The ADP report showed that private sector payrolls increased by 104K in July, reversing the June 33k drop and exceeding estimates.
• In addition, the preliminary report of the US Gross Domestic Product (GDP) published by the US Department of Commerce showed that the economy expanded at an annualized 3.0% rhythm during the second quarter, after a contraction of 0.5% in the first quarter.
• The US economic agenda on Thursday includes the publication of the Personal Consumption Expenditure Price Index (PCE), which will influence the USD price dynamics and will provide some momentum to the USD/JPY torque later during the US session.

The USD/JPY faces rejection near the 200 -day SMA; The downward potential seems limited

From a technical perspective, the USD/JPY torque stops in the fed -after movement close to the 200 -day simple mobile average (SMA). The aforementioned barrier is located near the region of 149.55 and now should act as an immediate obstacle. Since the oscillators in the daily chart have been gaining positive traction, a sustained fortress beyond should pave the way for a movement towards recovering the psychological level of 150.00. The impulse could extend even more towards the next relevant obstacle near the area of 150.40 before cash prices finally rise to the round number of 151.00.

On the contrary, any additional corrective drop could find a decent support near the region of 148.55, below which the USD/JPY torque could slide to the 148.00 mark and the minimum of the previous night, around the 147.80 area. The inability to defend the aforementioned support levels could drag cash prices to the 147.00 mark to the 100 -day SMA support, currently located near the 146.70 region. The latter coincides with the minimum of last week, which, if it breaks, could change short -term bias in favor of bassists and pave the way for a fall towards trying levels below 146.00.