In July, the nationwide core consumer price index, excluding fresh food, eased from 3.3% to 3.1%, slightly above the forecast of 3.0%. Overall inflation also slowed from 3.3% to 3.1% year-over-year, in line with expectations and well below the January peak of 4.0%. The decline was mainly driven by lower energy costs and government subsidies on utilities (–0.2%) and education (–5.6%), while food prices rose further from 7.2% to 7.6%. However, the core index excluding both fresh food and energy increased from 1.9% to 3.4%, supported by higher rents and rice prices. Analysts expect the indicator to remain above 3.0% for an extended period, even though overall inflation may drift toward 2.0%, reinforcing the Bank of Japan’s hawkish stance.
Meanwhile, the U.S. dollar index (USDX) holds at 98.60 as investors focus on the Federal Reserve, which faces political pressure from President Donald Trump’s administration. Following comments yesterday from several officials, including Atlanta Fed President Raphael Bostic, traders scaled back expectations for aggressive rate cuts. Later today at 16:00 (GMT+2), Fed Chair Jerome Powell is scheduled to speak at the Jackson Hole Economic Symposium, while other Fed members have already shifted market sentiment from strongly dovish to neutral. Bostic noted that additional data on inflation and wages will be released before the September meeting, which could reshape views on the economy. According to the CME FedWatch Tool, the probability of a 25 bps rate cut in September has dropped from 93.0% to 74.4%.
Support and Resistance Levels
On the daily chart, USD/JPY continues to correct within an uptrend, targeting the upper boundary of the ascending channel at 152.00–144.00.
Technical indicators strengthen the buy signal: fast EMAs on the Alligator indicator are diverging upward from the signal line, and the AO histogram is building bullish bars in positive territory.
Resistance levels: 149.60, 152.60.
Support levels: 147.30, 144.30.
Trading Scenarios
Long positions may be considered after a breakout and consolidation above 149.60, targeting 152.60. Stop-loss at 149.00. Implementation timeframe: 7 days or more.
Short positions may be considered after a decline and consolidation below 147.30, targeting 144.30. Stop-loss at 148.00.
Scenario
- Timeframe: Weekly
- Recommendation: BUY STOP
- Entry Point: 149.60
- Take Profit: 152.60
- Stop Loss: 149.00
- Key Levels: 144.30, 147.30, 149.60, 152.60
Alternative Scenario
- Recommendation: SELL STOP
- Entry Point: 147.30
- Take Profit: 144.30
- Stop Loss: 148.00
- Key Levels: 144.30, 147.30, 149.60, 152.60