• US Industrial Production missed expectations, rising only 0.1% MoM in May.
• BoJ is expected to raise rates to 1.00% on Tuesday.
• USD/JPY direction will depend heavily on the BoJ’s tone after the decision.

The USD/JPY pair trades with a cautious tone as investors digest softer United States (US) industrial activity data while positioning for the Bank of Japan’s (BoJ) interest rate decision due on Tuesday.

United States (US) Industrial Production rose 0.1% MoM in May, missing expectations of 0.3% and slowing sharply from the previous 0.9% increase. The weaker reading slightly limits support for the US Dollar (USD), as it points to softer momentum in the industrial sector.

This data directionally confirmed the NY Empire State Index for June, which gave a reading a 5.7 that below both the consensus of 14 and the May figure of 19.6.

Meanwhile, the Japanese Yen (JPY) remains focused on the BoJ as markets widely expect the central bank to raise its short-term policy rate from 0.75% to 1.00%, which would mark Japan’s highest rate in decades.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 160.07. The pair is sandwiched between its key moving averages, holding above the 100-period Simple Moving Average (SMA) at 159.78 but trading below the 20-period SMA at 160.29, which leaves the near-term tone neutral yet mildly capped on the topside. The Relative Strength Index (RSI) sits around 45, hinting at a loss of upside momentum without yet signaling oversold conditions, suggesting consolidation rather than an immediate directional break.

On the downside, initial support is seen at the horizontal level around 160.03, followed by 159.99 and 159.89, with the 100-period SMA reinforcing a deeper cushion near 159.78. On the topside, immediate resistance comes in at the horizontal barrier around 160.16, ahead of the 20-period SMA at 160.29; a sustained move above this cluster would be needed to reopen the path toward a more constructive bullish bias on USD/JPY.

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