INR/JPY: Japan's Inflation Falls Short Of Expectations

Japan's annual inflation rate in June 2023 rose marginally to 3.3% from May's 3.2%, but fell below market forecasts of 3.5%. While costs increased for various categories such as food, housing, transport, and medical care, fuel, light, and water charges continued to decline for the fifth consecutive month. Core inflation also inched higher to 3.3%, matching consensus but remaining outside the Bank of Japan's 2% target for the 15th month. On a monthly basis, consumer prices rose by 0.2% after remaining flat in May.

From a technical perspective, the INR/JPY is poised to continue its upward trajectory from the 50% retracement, as Japan's economic indicators suggest less need for inflation and future rate hikes. Anticipate a strong push higher in the coming weeks and months, aiming for new highs and potentially reaching the 100% extension level.