FX Empire reported on the US Continuing Jobless Claims, with Fed Chair Powell noting softening labor market conditions during testimony on Capitol Hill. Wall Street Journal Chief Economics Correspondent Nick Timiraos commented that the Fed is concerned about potential weakness in the labor market, a shift from previous statements.
In addition to jobless claims, housing and manufacturing sector data were also mentioned, but retail sales and labor market data are expected to have a greater impact on the Fed’s rate decisions. Investors are advised to monitor updates from the Fed regarding US retail sales and the labor market.
There is speculation on whether Fed Chair Powell will support a September Fed rate cut during his upcoming speech. Recent US inflation figures have increased the likelihood of a rate cut in September, with the probability surging from 77.7% to 96.3% in just a week. This could also set the stage for a rate cut in December.
Short-term forecasts for the USD/JPY pairing depend on various factors such as US retail sales, jobless claims, and inflation data from Japan. Weaker US economic indicators could solidify expectations of a September rate cut, while positive inflation figures from Japan may lead to expectations of a rate hike by the Bank of Japan. Investors are advised to stay informed and adjust their trading strategies accordingly.
The USD/JPY price action shows the currency pair below the 50-day EMA but above the 200-day EMA, indicating bearish near-term and bullish longer-term signals. A break above the 50-day EMA could push the pair towards 160, while a drop below 155 may lead to a fall towards the 200-day EMA. The 14-day RSI suggests a potential drop below 155 before entering oversold territory. Traders should consider inflation data, retail sales, jobless claims, and central bank commentary when making trading decisions.