The USD to JPY rate has steadily risen since the BOJ intervention at the start of May, touching the 156.80 level yesterday before falling below 155. The USD is retreating following the NFP employment released last week and the softer CPI and PPI inflation reports this week, which is giving a helping hand to the Japanese authorities, however, the larger trend still remains pretty bullish.

USD/JPY has experienced a complex interplay of factors in the last two months, influencing its price action. The intervention by Japanese officials initially led to a 10 cent decline in the pair, from 162 to 151 lows. But it has since recovered and entered another bullish trend as the price approached 1.58 yesterday. But the US CPI report was pretty weak, which sent this pair 200 pips lower, below 152.

USD/JPY Chart H1 – The Lows Continue to Get Higher

However, recent US employment data has put pressure on the USD, offsetting some of the gains in the pair. The weakening of the Japanese yen following the intervention suggests that market participants may perceive the intervention as a failure by the Japanese authorities to support a stronger Yen. Additionally, disappointing economic data from Japan, such as lower-than-expected average cash earnings last week, further reinforces concerns about Japan’s economic performance.

On the other hand, the USD has faced downward pressure due to weaker economic data such as weaker NFP last week and softer CPI and PPI inflation reports this week, which have led to increasing odds of Federal Reserve rate cuts. These factors have contributed to the recent bearish sentiment surrounding the USD. Early this morning we had the Q1 GDP report from Japan which was expected to show a -0.3% decline.

Japan Q1 Prelim GDP

USD/JPY Live Chart