The US dollar declined against the Japanese yen on Thursday as the latest US macroeconomic data neutralised Wednesday’s Fed minutes. The USDJPY pair traded at 144.44 at the time of writing, down by 0.26% on the daily chart. In addition, a federal court ruling against President Donald Trump’s reciprocal trade tariffs initially boosted the dollar, with the DXY to weekly highs of 100.54. However, news of an immediate appeal the administration sent the index down to 99.39.
Meanwhile, the US dollar got support from US GDP data, which showed that the world’s largest economy contracted by 0.2%, lower than the forecast estimate figure of -0.3%. However, the upside was limited after jobs figures trickled in, signaling an underlying weakness in the economy.
Initial Jobless Claims came in at 240k in the week ending May 22, exceeding the forecast figure of 229k. In addition, Pending Home Sales declined by -6.3% in April from March’s 5.5% growth, and worse than the forecast figure of -0.93%.
However, the dollar’s downside is limited by the yen’s weak fundamentals. Demand for Japan’s 30 and 40-year bonds declined to two-year lows, with bid-to-cover ratio down to 2.21 from March’s 2.92. Concerns rise over the country’s inflation trajectory have also pushed up yields on the bonds, adding tailwinds to USDJPY .
USDJPY Prediction
USDJPY pivots at 144.50 and resistance at that level will favour the sellers to stay in control. The pair will likely find its initial support at 144.04.However, a stronger momentum will break below that level and potentially send the action lower to test 143.46.
Alternatively, breaking below 144.59 will shift the momentum to the upside. With the buyers in control, the pair will likely go higher and encounter the first resistance at 145.00. The downside narrative will be invalid if the pair breaks above that level. Also, an extended control by the buyers could push the action higher to test 145.56.
