Daily Analysis USDJPY - 11 Aug 2023

The 10-year Treasury bond yields in the US and Japan have decreased, indicating a lack of confidence in central bankers' statements about nearing peak interest rates. US inflation data for July was in line with expectations, but yearly inflation accelerated more than anticipated. Federal Reserve policymakers' comments on inflation were mixed, leading to negative market sentiment. China's decision to allow local governments to raise funds through bond sales boosted market confidence in its economy. Concerns about geopolitical tensions between the West and China weighed on sentiment, supporting the USD/JPY price. Japanese officials are supporting an easy-money policy to bolster the USD/JPY pair. The upcoming US Producer Price Index, Consumer Sentiment Index, and Consumer Inflation Expectations will impact the USD/JPY direction.

As expected, USDJPY reached the 145.00 resistance level. A potential intervention in the market by the Japanese central bank and official authorities might be necessary to prevent the yen from declining further. A breach of the current resistance level could lead to the 146.00 resistance level, while a retracement from the existing resistance level could drive the price towards the 144.00 support level.