Japanese Yen little changed amid cooling US inflation

• USD/JPY is trading within a tight range in the mid-159.00s.
• Expectations of Fed rate hikes are offset by signs that US inflation is losing steam.
• Geopolitical uncertainty and Friday's Japanese GDP preview keep traders cautious.

USD/JPY is trading sideways on Thursday, hovering in the mid-159.00s and holding within its recent range. It is more of the same for the pair, which continues to move in consolidation as opposing forces cancel each other out.

On the US side, expectations for further Federal Reserve (Fed) tightening are holding steady, lending the US Dollar (USD) a floor. That support is being tempered, however, by signs that inflation is losing momentum, following this week's soft producer price data.

Middle East uncertainty is also adding to the cautious mood, keeping risk appetite in check and limiting sharp moves in either direction.

On the Yen side, attention turns to Friday's growth figures out of Japan. The economy is seen expanding for a third-straight quarter in Q2, supported by solid consumption and capital spending, a release that could hand the Japanese Yen (JPY) a fresh steer.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.53, retaining a bullish near-term bias as it holds above the 20-period Simple Moving Average (SMA) at 159.30 and a dense band of horizontal supports between roughly 159.03 and 159.48. The 100-period SMA at 160.43 remains the primary topside cap, while the Relative Strength Index (RSI) around 60.07 leans to the bullish side, suggesting constructive momentum as long as the pair stays supported above the short-term average.

On the downside, initial demand is seen at the nearby horizontal level at 159.48, followed by 159.37 and the 20-period SMA at 159.30, with deeper support at 159.18 and 159.03. On the topside, a decisive break above the 100-period SMA at 160.43 would open the way for further gains, while failure to clear this barrier would keep the pair consolidating within the current support band.

(The technical analysis of this story was written with the help of an AI tool. Know more.)