The USDJPY currency pair experiences a slowdown in strength after reaching a high point of 140.25 during the Asian trading session.

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• USD/JPY loses momentum after reaching the 140.25 mark in the Asian session.

The pair currently trades last at 139.909.

The previous day high was 141.18 while the previous day low was 139.92. The daily 38.2% Fib levels comes at 140.4, expected to provide resistance. Similarly, the daily 61.8% fib level is at 140.7, expected to provide resistance.

The USD/JPY pair remains under pressure and struggles to gain above the 140.00 mark heading into the early European session on Thursday. The major drops for the fourth consecutive day and currently trades around 139.95, down 0.2% for the day.

Market participants have been closely monitoring the direction of Japan’s ultra-loose monetary policy. The Bank of Japan (BoJ) will announce its interest rate decision on Friday, and investors widely anticipate the BoJ keeping monetary policy unchanged while maintaining its yield curve control (YCC) objectives of -0.1% for short-term interest rates and 0% for 10-year bond yields.

Japan’s core inflation rate surpassed that of the United States for the first time in eight years. The figure came in at 3.3% in June, up from 3.2% the prior month and 3.5% expected. This report revealed that Japan’s inflation remained above the BoJ’s target of 2% for the 15th consecutive month.

The Japanese inflation data suggest that policymakers will likely maintain a dovish stance in order to keep inflation above 2%. BoJ officials added that central banks prefer to examine more data before adjusting monetary policy. The monetary policy divergence between the BoJ and Fed might exert pressure on the Japanese Yen against its major rivals and could be a headwind for the USD/JPY pair.

On the US Dollar front, the Federal Reserve raised interest rates by a quarter percentage point to a target range of 5.25%–5.5%. The Greenback fell across the board following the Fed’s decision and statement. The US dollar Index (DXY), a measure of the value of the Greenback against six other major currencies, weakened to 100.65 and rebounded to 100.90 on Wednesday.

Fed Chairman Jerome Powell stated following the rate decision that inflation has moderated somewhat since the middle of last year, but the Fed’s 2% target has a long way to go. Powell reiterated that another rate hike is possible. He added that the Fed will consider the incoming data for additional rate hikes if needed. The hints that the Fed could be close to the end of its rate-hike cycles might cap the upside in the US Dollar.

Moving on, market participants will focus on the US preliminary GDP QoQ, the weekly Jobless Claims and Durable Goods Orders for June, which are due later in the day. The focus will shift to the BoJ meetings scheduled for Friday. Investors will monitor this development and find opportunities around the USD/JPY pair.

Technical Levels: Supports and Resistances

USDJPY currently trading at 140.04 at the time of writing. Pair opened at 140.24 and is trading with a change of -0.14 % .

The pair is trading below its 20 Daily moving average @ 141.39, below its 50 Daily moving average @ 140.88 , above its 100 Daily moving average @ 137.32 and above its 200 Daily moving average @ 136.79

The previous day high was 141.18 while the previous day low was 139.92. The daily 38.2% Fib levels comes at 140.4, expected to provide resistance. Similarly, the daily 61.8% fib level is at 140.7, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 139.72, 139.19, 138.45
• Pivot resistance is noted at 140.98, 141.71, 142.24

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