USD/JPY approaches 145.00 on sustained USD strength

• The USD/JPY tallied a week in a row of gains and closed at 144.13, it highest level since November 2022.
• The case of an intervention from the BoJ get relevance as the pair approaches 145.00.
• Eyes on Friday’s Core PCE data of the US and inflation data from Japan.

On Thursday, the USD/JPY closed the session with gains at 144.13 as the USD gained momentum on positive Gross Domestic Product (GDP) and Jobless Claims data. The focus shifts to key data releases on Friday from both countries.

Investors await Core PCE data from the US and CPI data from Japan

At the early Asian session, the Statistics Bureau of Japan will release the Tokyo Consumer Price Index (CPI), which is expected to rise, reaching a year-on-year increase of 3.8%. Additionally, the core CPI figure is anticipated to reach 4.4%, and the unemployment rate in May is expected to remain stable at 3.6%.

It is worth noting that the Bank of Japan (BoJ) is targeting wage growth, and Governor Ueada mentioned on Wednesday that he’ll consider a policy pivot once inflation aligns with the bank’s target. In that sense, Friday’s data may impact the JPY’s price dynamics. 

On the other hand, Core Personal Consumption Expenditures (PCE) will be released on Friday and is expected to come in at 4.7%. This figure is an important gauge of inflation for the Federal Reserve (Fed), so its outcome will impact the Federal Open Market (FOMC) next meeting’s expectations in July. As for now, markets discount higher odds of a 25 basis points (bps) hike.

USD/JPY levels to watch

According to the daily chart, the technical outlook for the USD/JPY is bullish. However, the pair will face strong resistance at 145.00, and as bulls seem to be losing some steam, a downward correction shouldn’t be taken off the table.

Support Levels to watch: 144.00, 143.50, 143.20.
Resistance Levels to watch: 145.00, 145.20, 145.50.

USD/JPY Daily chart