![](https://commoditysamachar.com/wp-content/uploads/2023/09/BLOG-44-1024x576.jpg)
The Japanese Yen dropped to its lowest levels in over ten month against the dollar as weak data from Japan raged concerns over slowing global economic growth.
The USD/JPY pair gains traction after retracing from the multi-month high of 147.8740. The pair currently trades near 147.3600, up 0.04%.
The Japanese yen came under pressure after the government downgraded its initial growth estimate for second quarter gross domestic product (GDP).
The latest data released by the Japanese Cabinet Office revealed that the nation’s Gross Domestic Product (GDP) for the second quarter came in at 1.2% QoQ from 1.5% in the previous reading and worse-than-expected at 1.3%. On an annual basis, the growth number grew 4.8% versus 6% prior and missed the market consensus of 5.5%. Meanwhile, Gross Domestic Product Deflator Q2 came in at 3.5% YoY from the previous reading of 3.4%. Finally, the Japanese Labor Cash Earnings for July rose 1.3% YoY versus 2.3% prior.
The revision showed that continued monetary stimulus from the Bank of Japan was not offering as much support to the Japanese economy as initially estimated, especially as the country grapples with sluggish wage growth and weakening demand in its biggest export markets, particularly China.
Markets were also watching for any intervention in currency markets by the Japanese government, following continued warnings over speculating against the yen.
Further, Japanese real wages extended their fall to a 16th consecutive month in July, government data showed on Friday, as salaries failed to keep up with rising prices.
Bank of Japan (BoJ) policymaker Junko Nakagawa stated on Thursday that it is appropriate to maintain an easy monetary policy for the time being. He added that Japan has not yet attained the BoJ’s price target stably. It’s worth noting that the monetary policy divergence between the US and Japan might cap the upside of the Japanese Yen and act as a tailwind for USD/JPY for the time being.
Additionally, Japan’s top currency diplomat Masato Kanda stated a willingness to closely monitor FX movements with a sense of urgency and added that all options are available.
Technical Outlook
![](https://commoditysamachar.com/wp-content/uploads/2023/09/USDJPY_2023-09-08_16-44-15-1024x471.png)
The USDJPY recently reached a 10- month high. Now it is traded at 147.4640, with minor gains of 0.12%.
On the above chart, a cluster of indecisive candle sticks indicates that the pair may consolidate around its recent high. Further, the Elliott wave drawn on the chart is indicating that the pair reached its 5 wave legs. Now the pair is ready to construct an ABC wave in the near future. The projected target was 145.50-145.00 on the downside.
Further, if the pair crosses 147.9500 then its expected to see further extension higher and could test 149.00-150.00 very soon.
Keep in mind that the market is giving an energetic move on BoJ official speech and economic numbers and presented views could have changed in the meantime.