USD/JPY hovers around 147, supported by fundamentals but weighed down by political uncertainty
2025-09-11 13:41:20
The latest data showed that Japan's producer price index (PPI) rose 2.7% year-on-year in August, higher than the previous value of 2.6%. At the same time, the second-quarter GDP was revised up to an annualized 2.2%.
In addition, the rebound in household spending and the first increase in real wages in seven months have strengthened market confidence in the Bank of Japan's interest rate hike this year. In contrast, the US PPI has cooled sharply to 2.6%, strengthening expectations that the Federal Reserve will cut interest rates at its September meeting.
However, uncertainty in Japan's domestic political situation and rising global risk appetite have weakened the yen's safe-haven appeal. Investors chose to remain cautious ahead of the release of US CPI, limiting the volatility of USD/JPY.
The market generally expects the Federal Reserve to implement three interest rate cuts in the remainder of the year, with a small probability of a 50 basis point move at the September meeting. If the Bank of Japan raises interest rates, it will significantly diverge from the Fed's easing cycle, which will provide long-term support for the yen.
From the daily chart, USD/JPY is lacking momentum after rebounding from its August lows and is currently hovering around 147.00. If it falls below this key support, it will open up further declines to around 146.30. If it falls below 146.00, it may accelerate its decline to 145.35 or even 145.00.
On the other hand, on the upside, initial resistance is at 147.80. If it breaks through 148.00, it will likely test the 200-day moving average (148.75) and further challenge the monthly high of 149.15. Overall, the RSI indicator is weak, and there is still downside risk in the short term.
Editor's opinion:
At this stage, the key to USD/JPY's performance lies in whether the 147.00 support level can hold. If US CPI data further confirms slowing inflation, expectations of a Fed rate cut will weigh on the dollar, pushing the exchange rate below 147.00. Conversely, if inflation data exceeds expectations, the dollar could experience a short-term rebound, but the resistance zone above 148.00 remains strong.
In addition, the rebound in household spending and the first increase in real wages in seven months have strengthened market confidence in the Bank of Japan's interest rate hike this year. In contrast, the US PPI has cooled sharply to 2.6%, strengthening expectations that the Federal Reserve will cut interest rates at its September meeting.
However, uncertainty in Japan's domestic political situation and rising global risk appetite have weakened the yen's safe-haven appeal. Investors chose to remain cautious ahead of the release of US CPI, limiting the volatility of USD/JPY.
The market generally expects the Federal Reserve to implement three interest rate cuts in the remainder of the year, with a small probability of a 50 basis point move at the September meeting. If the Bank of Japan raises interest rates, it will significantly diverge from the Fed's easing cycle, which will provide long-term support for the yen.
From the daily chart, USD/JPY is lacking momentum after rebounding from its August lows and is currently hovering around 147.00. If it falls below this key support, it will open up further declines to around 146.30. If it falls below 146.00, it may accelerate its decline to 145.35 or even 145.00.
On the other hand, on the upside, initial resistance is at 147.80. If it breaks through 148.00, it will likely test the 200-day moving average (148.75) and further challenge the monthly high of 149.15. Overall, the RSI indicator is weak, and there is still downside risk in the short term.
Editor's opinion:
At this stage, the key to USD/JPY's performance lies in whether the 147.00 support level can hold. If US CPI data further confirms slowing inflation, expectations of a Fed rate cut will weigh on the dollar, pushing the exchange rate below 147.00. Conversely, if inflation data exceeds expectations, the dollar could experience a short-term rebound, but the resistance zone above 148.00 remains strong.
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