Japanese Yen muted amid steady US PCE data

• USD/JPY trades near the 159.20 area as steady US inflation data reinforces expectations that the Fed may keep interest rates higher for longer.
• US Core PCE held at 3.3% YoY in April, highlighting persistent inflation pressure and supporting the US Dollar.
• The Japanese Yen remains under pressure as Tokyo Core CPI slowed to 1.4% YoY in May.

The USD/JPY pair trades in a muted fashion toward the 159.20 region on Friday as the United States Dollar (USD) finds support following the latest inflation data, while the Japanese Yen (JPY) remains pressured amid uncertainty surrounding the Bank of Japan’s (BoJ) policy outlook.

The latest Core Personal Consumption Expenditures (PCE) Price Index held steady at 3.3% YoY in April, reinforcing concerns that inflation remains elevated and supporting expectations that the Federal Reserve (Fed) could maintain a restrictive monetary policy stance for longer.

Meanwhile, the Japanese Yen has been weighed down by recent domestic data. Tokyo Core Consumer Price Index (CPI) inflation slowed to 1.4% YoY in May, remaining below the BoJ’s 2% target for a fourth consecutive month, while factory output unexpectedly rebounded in April.

Additional caution emerged after BoJ Governor Kazuo Ueda warned earlier this week that temporary energy shocks could become more persistent if they begin influencing wages and inflation expectations.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.24, holding in a neutral stance as it fluctuates between clustered support just below spot and layered resistance overhead. The pair trades above the 100-period Simple Moving Average (SMA) at 158.48, which underpins the broader uptrend, but remains capped by the 20-period SMA at 159.36, aligning with a horizontal barrier at the same level. The Relative Strength Index (RSI) hovers around 49, hinting at balanced momentum after the recent consolidation, with neither buyers nor sellers in firm control near current levels.

On the topside, immediate resistance appears at 159.25, followed by the tighter confluence around 159.36 where the 20-period SMA and a horizontal level converge, forming a key cap that bulls would need to reclaim to revive upside traction. On the downside, initial support emerges at 159.20, ahead of 159.10, while the 100-period SMA near 158.48 offers a deeper floor; a sustained break below this moving average would likely expose the pair to a more pronounced corrective phase.

(The technical analysis of this story was written with the help of an AI tool.)