Japanese Yen holds near intervention levels as US data supports Fed caution

• USD/JPY is within intervention territory as wide US-Japan yield differentials continue to weigh on the Yen.
• US core PCE inflation rose to 3.4% YoY, supporting Fed hiking odds.
• Investors now focus on the release of Tokyo CPI early in the coming Asian session for clues on inflation.

The USD/JPY pair trades within the historical intervention zone at 161.80 on Thursday, holding near multi-decade highs as the Japanese Yen remains slightly under pressure amid wide United States-Japan yield differentials.

Annual inflation in the United States, measured by the Personal Consumption Expenditures Price Index (PCE), climbed to 4.1% in May from 3.8% in April, according to the US Bureau of Economic Analysis. The reading came in line with market expectations. In the same period, the more important core PCE Price Index, which excludes volatile food and energy prices, rose 3.4% YoY, rising slightly from April.

Earlier in the day, US data showed that Initial Jobless Claims fell to 215K in the week ending June 20, below expectations and down from the previous revised 227K reading. Meanwhile, the final estimate of first-quarter US Gross Domestic Product showed the economy expanding at an annualized rate of 2.1%, revised higher from the previous estimate of 1.6%.

Looking ahead, traders will closely monitor the upcoming Tokyo Consumer Price Index (CPI) release for June, which is seen as a leading indicator of nationwide inflation trends in Japan. A stronger-than-expected reading could reinforce expectations that the Bank of Japan (BoJ) may continue tightening policy, offering some support to the Japanese Yen.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 161.78. The pair retains a bullish near-term bias as it holds above both the 20-period Simple Moving Average (SMA) at 161.66 and the 100-period SMA at 160.67, keeping the broader uptrend intact despite recent consolidation. The Relative Strength Index (RSI) around 59 suggests positive but not overstretched momentum, hinting that buyers still have control while leaving room for further upside attempts.

On the topside, immediate resistance is seen at the recent horizontal cap near 161.82, followed by the higher barrier at 161.89, where fresh supply could emerge. On the downside, initial support is aligned at 161.67, reinforced by the nearby 20-period SMA at 161.66, while a deeper pullback would expose horizontal support at 161.56 ahead of the more distant 100-period SMA around 160.67.

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