The US equities continued their winning streak for the seventh consecutive day, fueled by optimism that the upcoming US inflation data will support the Federal Reserve’s policy easing. Tech stocks played a significant role in the market gains, alongside positive sentiments across other sectors.
Fed Chair Jerome Powell’s recent testimony did not bring any major surprises, as he refrained from committing to a timeline for a rate cut despite acknowledging the improving US economy. The upcoming US inflation data release will be crucial, as any unexpected rise in inflation could disrupt the market’s expectation of a September rate cut.
Meanwhile, the USD/JPY pair is just 0.3% away from its recent high at 161.95, despite some uncertainty surrounding the US dollar ahead of the inflation release. The pair found support at the 160.20 level after a retracement, with the upward momentum indicated by the four-hour moving average convergence/divergence (MACD). The upcoming US inflation data will determine if the pair can break above the 161.95 resistance level.
Failure to surpass 161.95 may lead to a retracement towards 160.20, potentially forming a double-top pattern. Conversely, a breakout above 161.95 could target the 164.00 level next.