The US Jobs Report on Friday came in stronger than expected, pushing the USD/JPY towards 157. This could prompt the Bank of Japan to discuss ways to strengthen the Japanese Yen. The upcoming US CPI Report and FOMC Projections are important events to watch.
The US CPI Report will be crucial, as higher inflation figures could influence the FOMC’s decision on interest rates. With wages increasing and disposable income rising, consumer spending may also go up, potentially leading to demand-driven inflation.
Economists anticipate the Fed to maintain interest rates at 5.50% this week, but the possibility of a rate hike in September remains. The USD/JPY’s short-term direction will be influenced by these reports and decisions from both the Fed and the Bank of Japan.
The USD/JPY has shown bullish trends, staying above key moving averages. If it reaches 157, it may aim for 158 and even higher levels. However, a drop below the 50-day EMA could signal a decline towards the 151.685 support level.
Considering the upcoming GDP Report and Bank of Japan commentary, the USD/JPY’s movement will be closely watched. The 14-day RSI indicates a potential return to the April 29 high before possibly entering overbought territory.