The yen is still showing a trend to weaken further.

The Bank of Japan (BOJ) reported today that the inflation rate in Japan's wholesale sector slowed down in the consecutive month of May. This is attributed to the decrease in fuel prices and consumer goods, which indicates that the increased production costs may have caused a rise in consumer inflation rates.

The Corporate Goods Price Index (CGPI), which measures prices collected and reported by various companies for goods and services, increased by 5.1% in May compared to the previous year. This is lower than the expected increase of 5.5% and a decrease from the 5.9% recorded in April. The decrease can be attributed to the lower prices of electricity, fuel, metals, and chemical products.

However, the prices of food and beverages in Japan increased significantly by 7.9% in May compared to the previous year. Additionally, the price of electrical appliances increased by 5.5% in May. These indicators suggest that the inflation rate in sectors directly related to consumers, including the retail and food service sectors, is still showing no signs of slowing down, even if only slightly.

Based on Japan's experience in dealing with prolonged deflationary pressures over the past decades, it is influencing the Bank of Japan's (BOJ) considerations for initiating the first steps towards unwinding its exceptionally accommodative monetary policy. This is happening even as inflation rates and wages are increasing.

BOJ's announced forecast for inflation rates, at 3.5%, suggests a downward adjustment in the coming months. This aligns with the trend of decreasing global consumer goods prices. News sources indicate that BOJ is inclined to maintain its current accommodative monetary policy during its meeting on June 15-16. BOJ may also maintain its previous projection that the Japanese economy is moderately recovering.

Mr. Jin Kinsak, from Societe Generale Bank, expects BOJ to continue its Yield Curve Control (YCC) policy during this week's meeting but may expand the interest rate target range in the meeting scheduled for July.

Tomorrow, at 19:30 (GMT+7) the Federal Reserve (FED) will announce the Consumer Price Index (CPI) and Core CPI figures. The projected figures for CPI are around 4.1%. Investors have already anticipated a decrease in the inflation rate for May and expect at least one more interest rate hike. This is another reason for the weakening of the dollar today.

Technical analysis data (5H)

Resistance: 139.54, 139.82, 140.01

Support: 139.07, 138.88, 138.60

Source: Investing.com