USD/JPY hovered near 162.50 on Monday after a session range of barely 40 pips, holding above 162.00 and capped just past the half-handle. The pair remains within half a big figure of a cycle top just short of 163.00 and has stagnated for two weeks. Over that period it has logged a flat or higher weekly close in nine of the past ten weeks, while the daily Stochastic Relative Strength Index has fallen from overbought to the low-30s without the rate shedding a single big figure.
Policy Actions and Official Interventions
Policy and official action have done little to shift the balance. The Bank of Japan raised rates to 1.00% in June with USD/JPY near 160, even as its preferred underlying inflation gauge runs near 3% and official readings sit around 1.5%, leaving real rates negative; the Federal Reserve, by contrast, is held at 3.75%. Separately, the Ministry of Finance was reported to have spent close to 5.5 trillion yen defending 160 in one spring day, then acted again during the May holidays; the pair now trades two and a half big figures above that level.
Upcoming Economic Data and Key Levels
Markets will watch Tuesday’s trade figures at 23:50 GMT, with imports seen rising 21% YoY from 12.5% and exports 18.6% from 16.8%, while the deficit is forecast to narrow to 120 billion yen from nearly 392 billion; Thursday’s national CPI at 23:30 GMT is seen at 1.6% ex fresh food. In the US, Friday’s flash PMI is due at 13:45 GMT ahead of the Fed decision the following Wednesday, while Central Command said strikes would resume from 20:00 GMT Monday for a tenth consecutive night. Key levels cited are 163.00, then 163.50 and 164.00, with support at 162.00, the 50-day EMA near 161.00 and 160.50.
