Inflation in Japan continues to rise.

The yen weakened continuously to over 161 yen per U.S. dollar, approaching its lowest level in 38 years. This is due to investor uncertainty about whether the Bank of Japan will implement measures to control the domestic economy and curb inflation once again.

Investors expect the Bank of Japan to announce plans to reduce bond purchases at the end of July, and there are predictions that the central bank might raise interest rates again this month. This is amid pressure from rising oil drilling costs abroad, leading to an increase in oil prices once more. The rapidly weakening yen also increases the cost of importing goods from abroad. Meanwhile, investors are awaiting U.S. inflation figures, which might support expectations of an interest rate cut by the Federal Reserve.

Household spending in Japan fell by 1.8% in May, lower than the market's forecast of a 0.1% growth. This marks the fourth contraction this year, with spending on food and housing continuing to decline. Meanwhile, fuel, electricity, and water expenses have rapidly contracted as the government has lifted policies supporting water and electricity costs. This decrease in household spending reflects rising costs and declining income, such as hourly wages or reduced salary increases.

Japan's services PMI dropped to 49.8 in June from 53.8 in April, marking the first contraction in the services sector in several years. New orders, exports, and employment all increased at a slower rate. Additionally, rising input costs have forced companies to restructure and implement policies to support sales, resulting in business confidence falling to its lowest level since 2014 due to concerns about labor and rising costs.

Inflation in Japan rose to 2.8% year-on-year in May, up from 2.5% in April, due to rising energy prices, particularly oil. Additionally, electricity costs have surged rapidly as government energy subsidies ended. This has also increased transportation costs and food prices. Furthermore, the continuously weakening yen has led to higher import costs, affecting production costs.

Techical analysis data (5H)

Resistance: 161.73, 161.89, 162.02

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 161.31 - 161.44 but cannot break the support at 161.44, you may set a TP at approximately 161.89 and SL at around 161.14 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 161.73 - 161.89, you may set a TP at approximately 162.02 and SL at around 161.31 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 161.73 - 161.89 but cannot break the resistance at 161.73, you may set a TP at approximately 161.31 and SL at around 162.02 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 161.31 - 161.44, you may set a TP at approximately 161.14 and SL at around 161.89 or according to your acceptable risk.

Pivot point July 11, 2024 07:14 PM. GMT+7