USD/JPY resumed its decline today, partly influenced by a downward revision to US Q3 GDP. Currently, USD/JPY is testing the crucial 142.00 support level, and a breach below this level could open the door to further downside potential before the year concludes.

The final Q3 GDP figure, revised lower today, revealed a deceleration in consumer spending. Additional data from the US also fell short of expectations, with the Philadelphia Fed Manufacturing Survey indicating a deterioration in business conditions, posting a -10.5 figure, well below the forecasted -3. On a positive note, the job market remains robust, as initial jobless claims increased by 205k, surpassing the estimated 215k.

The Bank of Japan (BoJ) reaffirmed its commitment to the current accommodative monetary policy stance this week, influencing market dynamics. Despite US Dollar weakness, there seems to be limited downside for USD/JPY at the moment unless more explicit comments regarding a policy shift emerge. Japanese inflation data this week indicated a level of stickiness, complicating the BoJ’s efforts to boost wage growth above inflation. This element remains pivotal in determining when the BoJ might be ready to initiate the much-anticipated shift in monetary policy.