• Data on Friday showed that Tokyo’s inflation eased below 2%.

• Market participants are watching the upcoming election in Japan.

• Economic data showed a surge in US business activity.

The USD/JPY price analysis shows a dim outlook for Bank of Japan rate hikes after Tokyo’s inflation eased below the 2% target. As a result, the yen remained fragile near a three-month low and was heading for a fourth week of losses. Meanwhile, the dollar eased slightly with Treasury yields but hovered near recent peaks.

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Data on Friday showed that Tokyo’s inflation eased below the Bank of Japan’s 2% target, challenging the outlook for rate hikes. Japan’s central bank has been hoping for higher inflation and consumption to support its rate-hiking cycle. However, weaker price pressure might cause further delays in rate hikes, weakening the yen.

At the same time, market participants are watching the upcoming election in Japan, which might affect BoJ’s policy plans. According to polls, the ruling party could lose its majority status, which would change the outlook for fiscal policy. Such changes could also affect future rate hike plans.

Meanwhile, the greenback remained steady against most peers ahead of the US presidential election. Despite a slight pullback on Friday, the dollar is heading for another week of gains. This week’s rally in the dollar came as market participants worried about the escalating tensions in the Middle East.

At the same time, speculations about the outcome of the November election caused fluctuations. At first, Trump was in the lead, boosting the dollar. However, this changed after a Reuters poll revealed that Kamala was in the lead.

Elsewhere, economic data released on Thursday showed a surge in US business activity. Moreover, unemployment claims fell more than expected. The reports supported a more gradual pace for Fed rate cuts.

USD/JPY key events today

The pair might end the week quietly as neither the US nor Japan will release significant reports.

USD/JPY technical price analysis: Bulls aim for 153.00

On the technical side, the USD/JPY price has retreated after meeting solid resistance at the 153.00 psychological level. However, bulls remain in the lead despite the drop. The price trades above the 30-SMA, and the RSI is in bullish territory. Therefore, the price has upside potential.

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A rebound near the 30-SMA will allow bulls to challenge the 153.00 level for a new high. A break above will signal a continuation of the bullish trend.

https://www.forexcrunch.com/blog/2024/10/25/usd-jpy-price-analysis-boj-hike-odds-fade-as-inflation-cools/