The Japanese Yen gained ground against the US Dollar after the release of softer-than-expected US industrial production data. In May, US Industrial Production rose by just 0.1% month-over-month, missing market expectations of a 0.3% increase and decelerating sharply from the previous month's 0.9% gain. This weaker reading limited support for the US Dollar, reflecting softer momentum in the US industrial sector and confirming the direction indicated by the NY Empire State Index for June, which registered at 5.7—well below both the consensus of 14 and May's figure of 19.6 [1].
Market participants are now focused on the upcoming Bank of Japan (BoJ) interest rate decision, scheduled for Tuesday. There is widespread expectation that the BoJ will raise its short-term policy rate from 0.75% to 1.00%, which would represent Japan’s highest rate in decades [1].
From a technical perspective, the USD/JPY pair is trading at 160.07, positioned between key moving averages. It remains above the 100-period Simple Moving Average (SMA) at 159.78 but below the 20-period SMA at 160.29, indicating a neutral near-term tone with mild resistance on the topside. The Relative Strength Index (RSI) is around 45, suggesting a loss of upside momentum but not yet signaling oversold conditions. Support levels are noted at 160.03, 159.99, and 159.89, with the 100-period SMA providing additional support at 159.78. Resistance is seen at 160.16 and 160.29, with a sustained move above these levels required to shift the bias to bullish for USD/JPY [1].
CONCLUSION
The Japanese Yen's recent gains are attributed to weaker US industrial data and anticipation of a potential BoJ rate hike. Market sentiment remains cautious, with traders awaiting the BoJ's decision for further direction on the USD/JPY pair.