USDJPY Consolidates Below 200 SMA After Higher Japan GDP

USDJPY was seeing a lot of volatility earlier this month, but it has been consolidating for about a week. The markets were shaken after the Nikkei index plunged by over 12% last Monday, prompting traders to rush towards safe-haven currencies like the CHF and JPY. However, as investor confidence gradually returned, the USD/JPY pair rebounded from its low of 141.70, reaching above 148 last week where it has been staying.

The diverging monetary policies of the Federal Reserve and the Bank of Japan are heavily influencing USD/JPY , with some currency analysts suggesting that 150 could be the pair’s current ceiling. Opinions are divided on whether the Fed will cut rates by 25 or 50 basis points in September, contrasting with the BOJ’s recent 15 basis point rate hike. Japan’s latest cash earnings and household spending data were released last week.

USD/JPY Chart Daily – The 100 SMA Held As Support

While wages saw a slight increase, year-over-year spending declined, reflecting cautious behavior among Japanese consumers during the March-April pay negotiations. The Bank of Japan’s Summary of Opinions from the last meeting indicated that some members believe there is room to raise the “significantly low” policy rate, citing negative real rates at 25-year lows. While some members call for more data, others are ready to take action now, with one member viewing a neutral rate of “at least around 1%” as a medium-term goal. Today the Q2 GDP report from Japan showed a decent growth of 0.8%, but that didn’t offer much in terms of price action in JPY pairs.

USD/JPY Live Chart