Yen Weakens as Japanese Data Sends Mixed Signals

By RoboForex Analytical Department 

The USD/JPY pair edged higher on Monday, reaching 144.81, as the yen relinquished its earlier gains. The currency faced downward pressure following the release of disappointing wage figures, which dampened expectations for further monetary policy tightening by the Bank of Japan.

Japan’s nominal wages rose by just 1.0% year-on-year in May, falling well short of the 2.4% forecast and marking a third consecutive monthly slowdown. Meanwhile, real wages, which reflect actual purchasing power, declined by 2.9% – the sharpest drop in nearly two years and the fifth straight month of contraction.

Notably, the official data does not yet fully account for the impact of this spring’s record wage agreements, negotiated with trade unions. Several smaller and non-unionised firms have been slower to implement these changes, delaying their effect on broader wage trends.

Further weighing on the yen were remarks from Prime Minister Shigeru Ishiba, who stated on Sunday that Japan would not make “easy concessions” in trade talks with the US, despite the threat of 35% tariffs on Japanese exports. Negotiations are expected to resume this week.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY has formed a consolidation range around 144.33 before pushing upward. The immediate target is 145.33, after which we anticipate a downward correction towards 142.45, with potential for further declines to 141.70. This scenario is supported by the MACD indicator, where the signal line remains above zero and points firmly upward.

H1 Chart:

On the H1 chart, the pair corrected to 144.11 before resuming its upward trajectory, targeting 146.26. Upon reaching this level, we expect a new decline towards 143.90. A break below this level could extend losses to 141.70. The Stochastic oscillator aligns with this view, with its signal line currently at 80 and turning downward.

Conclusion

The yen’s weakness reflects subdued wage growth and lingering trade uncertainties, while technical indicators suggest potential volatility ahead.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.