The US Dollar (USD) edged higher against the Japanese Yen (JPY) on Friday, trading at 158.22, but remained confined within a narrow range. Downside attempts were contained above the 157.50 area, while the 200-day Simple Moving Average (SMA) at 158.54 acted as a cap for bullish momentum. The pair's movement comes amid soft Japanese household spending data, which showed a 3.1% year-over-year decline in August, marking the eighth consecutive contraction and signaling ongoing weakness in Japan's domestic demand. This decline was less severe than the market's expectation of a 3.6% drop [1].
Despite the weak spending data, the Yen found some support from recent comments by Bank of Japan (BoJ) committee member Ayano Sato, who advocated for gradual monetary tightening. Sato, one of two members who voted against the BoJ's September rate hike, suggested the possibility of a steeper tightening cycle by the central bank [1].
Technical analysis indicates that the USD/JPY pair is seeking direction following a recovery in September. The daily chart shows mildly constructive momentum, with the Relative Strength Index (RSI) in the mid-50s and a positive Moving Average Convergence Divergence (MACD). Immediate resistance is at the 200-day SMA (158.54), followed by late-September highs around 159.00 and the September 2 high at 160.39. On the downside, support is seen at 157.50, with further levels at 156.40 and 155.34 [1].
Market data reveals that the US Dollar was the strongest against the Japanese Yen among major currencies, gaining 0.21% on the day. However, the USD showed some weakness against most other peers as US Treasury yields retreated from multi-decade highs [1].
CONCLUSION
USD/JPY remains range-bound near 158, with technical resistance and support levels clearly defined. Weak Japanese household spending and dovish BoJ commentary are weighing on the Yen, while the US Dollar's strength is tempered by lower Treasury yields. The market is awaiting further catalysts for a decisive move.