USD/JPY Price Analysis: Drops below the 146.00 mark, focus on US PCE data

• USD/JPY loses momentum around 145.90, stands above the key 100-hour EMA. 
• The Relative Strength Index (RSI) stands in bearish territory below 50. 
• The immediate resistance level appears at 146.30; the first support level is located at 145.70.

The USD/JPY pair attracts some sellers during the early European session on Thursday. The major currently trades around 145.90, losing 0.23% on the day. Markets turn cautious ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve (Fed) preferred gauge of inflation. 

Furthermore, Bank of Japan (BoJ) Board member Toyoaki Nakamura stated on Thursday that policymakers need more time to transition to monetary tightening. The remark renews hawkish concerns about BoJ and exerts pressure on the USD/JPY pair. 

About the data, the Japanese Retail Sales rose by 6.8% YoY in July versus 5.6% prior, better than the expectation of 5.4%. Meanwhile, the nation’s Industrial Production dropped by 2.0% MoM in July from a rise of 2.4% in the previous month, compared to market consensus of a 1.4% drop.

According to the four-hour chart, the USD/JPY pair stands above the key 100-hour Exponential Moving Averages (EMAs) with an upward slope, which supports the buyers for the time being. However, the Relative Strength Index (RSI) stands in bearish territory below 50, indicating that the further downside cannot be ruled out. 

The immediate resistance level for USD/JPY appears at 146.30 (the midline of the Bollinger Band). Any meaningful follow-through buying will see a rally to the boundary of the Bollinger Band and a psychological round mark at the 146.90-147.00 region. Further north, the next barrier to watch for USD/JPY is at a Year-To-Date (YTD) high of 147.37, followed by 147.55 (a high of November 2022) and 148.00 (a round figure).

On the flip side, the first support level is located near a lower limit of the Bollinger Band at 145.70. The next contention level is seen at 145.30 (100-hour EMA). Any intraday pullback below the latter would expose the next critical downside stop at 145.00 (a psychological round mark) and finally at 144.55 (a low of August 23).

USD/JPY four-hour chart