BoJ Tightening Expectations Boost Japanese Yen as USD Falls

Japan's economy is showing signs of improvement, with the July Consumer Price Index (CPI) rising to 1.9% year-over-year, in line with expectations. This marks a continuation of the steady increase in prices seen since February.

The Bank of Japan (BoJ) is expected to tighten monetary policy next month, with about 20 basis points (bps) of hikes already priced into swaps. This expectation has led to a modest decline in the US dollar against the Japanese yen (USD/JPY).

Technical analysts at Scotiabank describe the setup as neutral to bearish, with losses below 158.25 potentially signaling further downside for the USD/JPY.