USD/JPY Price Analysis – July 03, 2023

Daily Price Outlook

In the search for fresh catalysts to sustain its intraday gains, the USD/JPY pair hovers around 144.60, facing conflicting risk factors and disappointing economic data from Japan. This follows a reversal of the previous day's decline from its highest levels since November 2022.

The Bank of Japan's (BoJ) dovish monetary policy stance finds support in Japan's Tankan Manufacturing Survey for Q2 2023, which indicates expectations of low inflation.

Furthermore, the final negative reading of Japan's Jibun Bank Manufacturing PMI for June, matching earlier forecasts at 49.8, may have weighed on the USD/JPY exchange rate.

A notable divergence in monetary policy between the Federal Reserve (Fed) and the Bank of Japan (BoJ) continues to drive the USD/JPY pair higher. Traders hold the belief that the BoJ will maintain its negative interest rate policy at least until the next year.

BoJ Governor Kazuo Ueda recently emphasized the absence of immediate plans to adjust the ultra-loose policy framework or amend the yield curve control measures.

The upcoming release of the ISM Manufacturing PMI during the early North American session on Monday will be the first significant US macroeconomic report of the month. Market participants will also closely monitor the release of the FOMC meeting minutes on Wednesday and the highly anticipated US monthly employment figures, known as the NFP report, on Friday.

As a result, traders may exercise caution in making aggressive directional bets on the USD/JPY pair in the interim.

USD/JPY Price Chart – Source: Tradingview

USD/JPY - Technical analysis

The USD/JPY pair experienced a temporary downturn, testing the support line of the intraday bullish channel. However, today's market open shows a bullish inclination, driven by positive signals on the four-hour timeframe. This suggests a potential continuation of the main bullish trend.

As a result, the next target for the pair is set at 146.10. It's worth noting that if the price breaks below 144.25, a short-term bearish correction could occur before resuming its upward movement.

For today's trading, the expected range is between support at 144.00 and resistance at 145.50.