Daily Analysis USDJPY - 10 July 2023

The US Dollar (USD) has started the new week positively, putting an end to a two-day losing streak and rebounding from its lowest level since June 2022, which was reached on Friday. This recovery is providing some support to the USD/JPY pair. The expectation of a 25-basis points interest rate hike by the Federal Reserve (Fed) later this month is strengthening US Treasury bond yields and acting as a tailwind for the USD. However, there are fewer expectations of additional rate hikes beyond July, which might discourage traders from making aggressive bets on the USD.

The US non-farm payroll (NFP) report released on Friday indicated that the economy added the fewest jobs in two and a half years in June, suggesting a slowdown in labor market conditions. Additionally, there are indications of a gradual decrease in inflation, leading to speculations that the Fed might eventually adopt a less hawkish stance, possibly sooner rather than later. Furthermore, there are speculations that Japan might intervene in the currency markets to support the Japanese Yen, which could limit the upside potential for the USD/JPY pair. As a result, caution is advised before making any further bullish moves.

Traders may also choose to remain cautious ahead of the release of the latest US consumer inflation figures scheduled for Wednesday. The upcoming data is expected to show further deceleration in the headline consumer price index (CPI) for June.

The USD/JPY correct toward the 142.00 level finding a solid support level where the pair seems to find the level challenging. Next CPI will be the next big thing for any recovery toward the 145.00 last resistance level or a breakout of the actual level. On the 4-hour chart, the 200MA is a challenging level for the pair in the event of a downward breakout. 

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
147.00	146.00	145.00	143.60	142.20	141.20