Created
: 2025.06.06
2025.06.06 11:43
The Japanese Yen (JPY) drifts lower for the second consecutive day on Friday in reaction to the disappointing release of Japan's Household Spending data. This comes on top of a fall in Japan's real wages for the fourth consecutive month and concerns that global trade tensions may weaken wage momentum, which might complicate the Bank of Japan's (BoJ) efforts to normalize monetary policy. Adding to this hopes for the resumption of US-China trade talks and a positive risk tone turn out to be other factors undermining the safe-haven JPY. This helps the USD/JPY pair to hold steady above mid-143.00s during the Asian session.
Meanwhile, market players are still pricing in the possibility that the BoJ will continue raising interest rates in 2025 amid the broadening inflation in Japan. This, along with persistent geopolitical risks, could limit deeper JPY losses. The US Dollar (USD), on the other hand, languishes near its lowest level since April 22 touched on Thursday amid worries about the worsening US deficit outlook and bets that the Federal Reserve (Fed) will lower borrowing costs further. This could further offer support to the lower-yielding JPY and cap the USD/JPY pair. Traders might also opt to wait for the release of the key US Nonfarm Payrolls (NFP) report.
From a technical perspective, the USD/JPY pair has been oscillating in a familiar range since the beginning of this week, forming a rectangle on the daily chart. Against the backdrop of the downfall from the May monthly swing low, this might still be categorized as a bearish consolidation phase. Moreover, slightly negative oscillators on the daily chart suggest that the path of least resistance for spot prices is to the downside. Hence, any further move up is more likely to attract fresh sellers near the 144.00 round figure.
This is followed by the weekly high, around the 144.40 region. The latter coincides with the 100-period Simple Moving Average (SMA) on the 4-hour chart, which if cleared might shift the bias in favor of bullish traders and allow the USD/JPY pair to reclaim the 145.00 psychological mark.
On the flip side, weakness below the 143.50-143.45 area could be seen as a buying opportunity near the 143.00 round figure. Some follow-through selling, leading to a subsequent slide below the 142.75-142.70 region, could make the USD/JPY pair vulnerable to accelerate the downfall to the 142.10 region, or last week's swing low. A convincing break below the latter could make spot prices vulnerable to the recent downward trajectory and slide further to the next relevant support near the 141.60 area en route to sub-141.00 levels.
The Overall Household Spending released by the Ministry of Internal Affairs and Communications is an indicator that measures the total expenditure by households. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth. A high reading is positive (or Bullish) for the JPY, while a low reading is negative (or bearish).
Read more.Last release: Thu Jun 05, 2025 23:30
Frequency: Monthly
Actual: -0.1%
Consensus: 1.4%
Previous: 2.1%
Created
: 2025.06.06
Last updated
: 2025.06.06
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