USD/JPY prints four-day winning streak above 140.00 despite upbeat Japan inflation, sluggish yields

• USD/JPY edges higher around the weekly top after four-day uptrend.
• Japan National CPI improves in June but defense of BoJ policy keeps Yen pair buyers hopeful.
• Yields struggle to defend previous day’s run-up amid light calendar, pre-Fed anxiety.
• Next week’s monetary policy announcements will be crucial for clear directions, Reuters poll suggests no YCC tweak by BoJ.

USD/JPY clings to mild gains around 140.15-20 as it seesaws near the weekly top while rising for the fourth consecutive day ahead of Friday’s European session. In doing so, the Yen pair braces for the first weekly gain in three while ignoring upbeat Japan inflation and softer yields amid dovish concerns about the Bank of Japan (BoJ).

As per the latest Reuters poll, conducted between July 10 and 19, more than 75% of respondents favor the BoJ’s inaction during the next week’s monetary policy meeting. In doing so, the Japanese central bank won’t even alter the Yield Curve Control (YCC) policy, signals the survey report.

Earlier in the day, Japan inflation per the National Consumer Price Index (CPI), for June rose to 3.3% YoY from 3.2% versus 3.5% expected. Further details unveil that the National CPI ex Fresh Food matches 3.3% YoY forecasts, improving from 3.2% prior, whereas the National CPI ex Food, Energy eases to 4.2% expected figures compared to 4.3% previous readings.

On Thursday, the Japanese government announced a downward revision of the Asian major’s Financial Year (FY) 2023-24 growth forecasts to 1.3% versus the previously expected 1.5% figures. Also, Japan Prime Minister (PM) Fumio Kishida defends the dovish concerns about the Bank of Japan (BoJ) by showing readiness to create a society where wage hikes become a norm.

That said, the US Dollar Index (DXY) jumped the most in a month to refresh the weekly top the previous day before recently retreating to 100.80. In doing so, the greenback’s gauge versus the six major currencies portrays the market’s positioning for the next week’s Federal Open Market Committee (FOMC) monetary policy meeting announcements after cheering mostly upbeat US job clues. That said, US Initial Jobless Claims dropped to 228K for the week ended on July 14, the lowest since May, versus 237K prior and 242K market forecasts.

On a different page, the Wall Street benchmark closed in the red amid the downbeat performance of energy and technology shares, which in turn exerts downside pressure on Japan’s Nikkei 225 but the S&P500 Futures remain indecisive after reversing from the yearly high. Further, the US Treasury bond yields refreshed their weekly highs the previous day and propelled the US Dollar before the latest retreat.

Looking ahead, a light calendar may restrict immediate USD/JPY moves before the next week’s monetary policy meetings of the Fed and the BoJ. However, the risk catalysts may entertain the traders.

Technical analysis

Although the 200-DMA puts a floor under the USD/JPY prices near 136.90, the Yen pair’s immediate upside appears guarded by the 50-DMA hurdle of 140.60.