USD/JPY Price Analysis: Yen Gains After Ishiba’s Win

• Japan announced a new prime minister on Friday after a tight race.

• Japan’s new prime minister, Ishiba, supports current monetary policy moves.

• US inflation rose 0.1%, which was lower than the forecast of 0.2%.

USD/JPY price analysis supports further downside as the yen rises after Japan’s former defense minister Shigeru Ishiba wins the slot as the next prime minister. Meanwhile, cooler-than-expected US inflation data weighed on the dollar.

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Japan announced a new prime minister on Friday after a tight race. The result boosted the yen as Ishiba supports current monetary policy moves. He may therefore continue to support the Bank of Japan as it raises borrowing costs.

Although the last meeting was a little cautious, economists expect at least one BoJ rate hike before the end of the year. Higher borrowing costs are narrowing the rate gap between Japan and the US.

Elsewhere, market focus remained on the core US PCE report. The Federal Reserve recently cut interest rates by a massive 50 bps. It was a clear indication of confidence that inflation was under control. Therefore, policymakers expect price pressure to continue to ease to the target.

Consequently, an unexpected figure could change the outlook for future moves. There is currently a 50% chance of another massive sale in November. Friday’s data showed inflation rose 0.1 percent, less than the forecast of 0.2 percent. Therefore, the Fed has every reason to continue to reduce borrowing costs.

Additionally, a soft landing is more likely as the economy remains resilient. In particular, data on Thursday showed that US jobless claims fell to 218,000, compared to expectations of 225,000. Another report showed that corporate profits rose at a faster pace than expected.

Key USD/JPY Events Today

• US Core PCE Price Index m/m

USD/JPY Price Technical Analysis: Bear Swallowing Candle Signals Reversal

Technically, the USD/JPY price broke out of its bullish channel with a engulfing candle. At the same time, the price dropped below the 30-SMA, indicating a change in sentiment. Meanwhile, the RSI dipped below 50, into bearish territory.

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However, the decline has reached the 143.01 support level and could stop here before continuing lower. A break could allow price to retest the support of the recently broken channel. If the bears remain in control, the price will likely drop below the 143.01 support to retest the 141.01 level.

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