USDJPY Remains Supported As Japanese Inflation Falls Further

The bullish trend has slowed in USDJPY, however, the lows keep getting higher, supported by MAs, as inflation keeps cooling off further, confirmed by today’s Tokyo Core CPI report as well.

This forex pair declined more than 20 cents in the Summer, falling below 1.40, helped by the BOJ intervention as well, but reversed and went through a strong bullish momentum in the previous months. However, the upside momentum has slowed this week, but the 100 SMA (green) continues to act as support on the daily chart, pushing the lows higher.

USD/JPY Chart Daily – The 100 SMA Has Been Acting As Support

Heightened risk aversion drove the USD/JPY pair sharply lower by 3 cents late last week. The selloff extended into early Monday, pushing the pair down to 153.28 alongside declines in equity markets. However, the decline found a floor as sellers encountered solid support at the 100-day SMA on the daily chart, which helped stabilize the pair. Following this, buyers stepped in, lifting the price by 2 cents, but the recovery proved short-lived.

Yesterday, sellers reentered the market, prompting another test of the 100-day SMA. This level held firm once again, reinforcing its strength as a potential entry point for bullish positions on USD/JPY. Meanwhile, Japan’s economy continues to face significant challenges, with weakening domestic indicators such as reduced personal spending, lower consumption levels, and softening inflation reflecting broader economic struggles.

Japan National CPI Inflation for October

• • Headline National CPI:

    • Actual: 2.3%
    • Expected: 2.2%
    • Prior: 2.5%

  • Core-Core Inflation (Excluding Fresh Food & Energy):

    • Actual: 2.3%
    • Expected: 2.3%
    • Prior: 2.1%

  • Core Inflation (Excluding Fresh Food):

    • Actual: 2.3%
    • Expected: 2.2%
    • Prior: 2.4%

• Economic Stimulus Package Announced

  • Total package size: 39 trillion yen (~252 billion USD).
  • State spending component: 13.9 trillion yen.
  • Focus: Increasing wages remains a top priority.

Japan’s October inflation data met or slightly exceeded expectations, with core-core inflation aligning with forecasts and the headline CPI slightly above projections. Meanwhile, the government has unveiled a substantial stimulus package of 39 trillion yen, emphasizing wage growth to sustain economic recovery amidst persistent inflationary pressures.

USD/JPY Live Chart