Japanese Yen Weakens Ahead of Tokyo Inflation Data Amid Risk-On Mood

USD/JPY hovers around 159.40 on Wednesday, maintaining modest gains as a strengthens the US Dollar (USD) keeps the pair supported. The Dollar broadly advances ahead of the Jackson Hole Symposium.

United States (US)-Iran ceasefire reports that could potentially reopen the Strait of Hormuz helped reduce demand for traditional safe havens, pressuring Gold prices and diminishing some of the Japanese Yen’s appeal even as market sentiment remains cautious pending confirmation of the deal.

The immediate focus for the Yen is Tokyo’s August inflation data, due for release on Thursday. Both the headline Tokyo Consumer Price Index (CPI) and the core measure excluding food and energy are projected to remain steady at approximately 2% year over year.

Short-term technical analysis:

In the 4-hour chart, USD/JPY trades around 159.33, maintaining a constructive bullish bias as it remains above both the 20-period Simple Moving Average (SMA) at 159.16 and the 100-period SMA at 158.86. The concentration of nearby support levels between 159.16 and 159.26 provides a cushion for the pair following this week’s upward movement, while the Relative Strength Index (RSI) near 56 validates continued positive momentum without yet indicating overbought conditions.

On the upside, immediate resistance appears at 159.37, followed by the recent horizontal ceiling at 159.43, where buyers might pause or reduce positions. To the downside, initial support is seen at the horizontal level of 159.26, ahead of the 159.16 support that aligns with the 20-period SMA, while deeper demand is suggested by the 100-period SMA at 158.86 should corrective pullbacks extend.

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