USD/JPY hits fresh lows below 147.00 on generalised Dollar weakness

• The US Dollar is giving away post-PPI gains, extending losses below 147.00.

• The market is still pricing a Fed cut in September, while Japanese GDP data has boosted hopes of BoJ tightening.

• USD/JPY confirmed a Bearish Flag after rejection at 147.95 on Thursday.

The US Dollar recovery attempt seen on Thursday was capped below 148.00, and the pair has resumed its downtrend, extending losses below 147.00 on Friday, amid a broad-based US Dollar’s weakness.

With the impact of the strong US PPI fading, investors' hopes that the meeting between Trump and Putin might bring some progress toward a peace process in Ukraine are feeding a moderate risk appetite and weighing on the US Dollar.

The market, on the other hand, is assuming that chances of a 25 bps Fed rate cut in September remain nearly fully priced, while the stronger-than-expected GDP figures in Japan provide further reasons for the BoJ to continue tightening its monetary policy.

USD/JPY confirms a broken bearish flag

USDollar bears broke below the bottom of a short ascending channel earlier this week, and Thursday's recovery was halted right below the channel’s reverse trendline, confirming a bearish flag and pointing to a deeper downtrend.

The pair has retreated below the 147.00 level, after a rejection at 147.95 on Thursday, and looks likely to retest Thursday’s low at 146.25. Further down, 145.80 broadly aligns July 10 and July 25 lows. The BF´s measured target is a few pips above the July 7 low, at 144.25.

To the upside, immediate resistance is Thursday’s high, at 147.95, ahead of the mentioned reverse trendline, now at 148.30. Further up, the August 12 high, at 148.50, would come next.