USD/JPY jumps above 146.00 following PBoC’s unexpected rate cut

• The USD/JPY increased above 146.00, showing more than 0.60% of daily gains.
• The Yen is losing traction following the PBoC rate cut.
• Investors await the annual Jackson Hole Symposium on Thursday´s session.

At the start of the week, the USD/JPY sees green around 146.20, showing more than 0.60% gains on the day. In that sense, the People’s Bank of China’s (PBoC) unexpected decision to cut the one-year Loan Prime Rate (LPR) is causing the Yen to lose ground, as well as the dovish stance of the Bank of Japan (BoJ). On the US side, investors remain on the sidelines awaiting S&P PMI and Thursday’s Jackson Hole Symposium.

Investors await forward guidance from Jerome Powell at Jackson Hole Symposium

On Thursday, Jerome Powell will deliver a speech at the 2023 Jackson Hole Symposium, where investors will look for clues regarding the Federal Reserve’s (Fed) upcoming decision. As for now, inflation in the US is seeing a mixed picture, with the Consumer Price Index (CPI) having decelerated in July, but the Producer Price Index (PPI) slightly accelerating in the same month while economic activity remains strong. That said, Chair Powell’s outlook will help investors model their expectations and will likely set the pace of the USD price dynamics.

On the Japanese side, it was reported that the Bank of Japan (BoJ) would consider tightening when local wages increase and its dovish stance is applying pressure on the JPY. In addition, the PBoC delivered an unexpected rate that reminded investors about China’s gloomy outlook, also contributing to Yen’s downside. 

USD/JPY Levels to watch

Observing the daily chart, USD/JPY suggests a bullish sentiment for the near future. The Relative Strength Index (RSI) remains in the positive zone above its midline, showing an upward slope near overbought territory. Concurrently, the Moving Average Convergence Divergence (MACD) prints green bars, reinforcing the bullish momentum. Additionally, the pair is above the 20,100,200-day Simple Moving Averages (SMAs), indicating that the bulls are in command of the broader picture.

Support levels: 146.00, 145.50, 145.00.

Resistance levels: 146.55, 147.00, 147.50.

USD/JPY Daily chart