• USD/JPY slipped lower on Friday as Japanese yen firmed after data showed wholesale inflation rose in August.
• Japan’s producer price index rose 7.6% year-on-year in August, beating the median market forecast of a 7.4% increase, BOJ data showed. The gain followed a revised 7.7% rise in July.
• The data comes amid increasingly hawkish communication from the Bank of Japan, pushing markets to almost fully price a 25-basis-point rate hike to 1.25% at next week’s meeting..
• BOJ Governor Kazuo Ueda has said the central bank is closely monitoring wholesale inflation for signs of how much of the higher costs firms can pass on to households.
• The BOJ will next announce its policy decision on September 17-18, with markets nearly fully pricing a rate hike to 1.25% from 1%, following its increase in June.
• Immediate resistance is located at 154.70 (Daily high), any close above will push the pair towards 155.32(38.2%fib).
• Support is seen at 152.81(23.6%fib) and break below could take the pair towards 151.98(Lower BB)
Recommendation: Good to sell around 154.30, with stop loss of 155.90 and target price of 153.50
