The Japanese Yen (JPY) gained ground against the US Dollar (USD) during Tuesday's American session, with USD/JPY trading near 157.40 as the Yen built on its recent gains. This move was driven by softer US labor demand data, specifically the Job Openings and Labor Turnover Survey (JOLTS), which showed vacancies falling to 7.359 million in June from a revised 7.537 million in May. This figure was below the consensus estimate of 7.4 million, signaling a further cooling in US labor demand and weakening the USD. The softer data tempered the impact of Monday's robust ISM Manufacturing PMI and complicated the case for an additional Federal Reserve rate hike, leading to lower US Treasury yields and narrowing the interest rate differential that has supported USD/JPY for much of the year [1].
Lower energy prices also provided a tailwind for the Yen, benefiting Japan as a major net energy importer. Meanwhile, reports from Al Arabiya and Al Hadath indicated that an announcement regarding the reopening of the Strait of Hormuz could be imminent, with arrangements potentially being announced within hours or by Wednesday. This development could further influence energy prices and, by extension, the Yen [1].
Looking ahead, investors are focused on the upcoming Bank of Japan (BoJ) Monetary Policy Meeting Minutes, which will cover the June meeting. However, the minutes predate both the suspected intervention and last week's hawkish hold, limiting their potential to surprise the market. Additionally, Japan is set to release Labor Cash Earnings data, forecast to accelerate to 3.4% year-over-year in June from 3.2%. BoJ Governor Kazuo Ueda has emphasized the importance of the wage-price cycle for policy outlook, so a strong wage print could reinforce the hawkish stance and add further pressure on USD/JPY [1].
From a technical perspective, USD/JPY is trading at 157.37, maintaining a bearish near-term bias as it remains below both the 20-period SMA at 158.52 and the 100-period SMA at 162.06. The Relative Strength Index (RSI) at 31 suggests that downside momentum is slowing but not yet reversing. Immediate support is seen at 157.23, with further support at 156.62 and 156.30, while resistance levels are at 157.99, 158.52, and 162.06 [1].
CONCLUSION
The Japanese Yen's recent strength is attributed to weaker US labor data and lower energy prices, which have pressured USD/JPY lower. Market participants are now awaiting key Japanese wage data and the BoJ minutes for further direction. The current technical setup points to a bearish bias for USD/JPY, with downside risks persisting.