• USD/JPY edged lower as the yen strengthened after softer U.S. CPI data eased Fed rate hike expectations, weighing on the dollar.
• U.S. annual inflation slowed to 3.5% in June, while the CPI fell 0.4% month-on-month, the first decline since April 2020, driven by lower energy prices.
• Traders now expect that the Fed will skip a July rate hike, with the odds of one halved to 16% after the inflation reports based on Fed funds futures prices at the CME Group.
• Despite modest gains, the yen remained near 40-year lows as Tokyo refrained from announcing concrete measures to support the currency.
• Immediate resistance is located at 162.75 (23.6%fib), any close above will push the pair towards 163.12(Higher BB).
• Support is seen at 161.93(SMA20) and break below could take the pair towards 160.80(38.2%fib).
Recommendation: Good to buy around 161.30, with stop loss of 161.80 and target price of 160.50
