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DailyBubble News

USD/JPY Forecast: Bank of Japan Talks Yen, Fed Rate Cuts Bets Fall

US Economic Calendar: FOMC Members and Fed Rate Cut Bets

Investors should pay attention to comments from Fed speakers on Monday, focusing on inflation, the economic outlook, and interest rates. Last week, various economic indicators, including the FOMC Meeting Minutes, labor market data, and the US Services PMI, tempered expectations of a September Fed rate cut.

Michigan Inflation Expectations rose from 3.2% to 3.3% in May, surpassing the 2% target. The CME FedWatch Tool showed a shift in investor expectations, with the likelihood of the Fed keeping interest rates unchanged rising from 35.2% to 50.2%.

The upcoming US Personal Income and Outlays Report on Friday could impact investor sentiments, especially if softer inflation numbers and a decrease in personal income/spending reignite bets on a September Fed rate cut.

Short-term Forecast

The near-term outlook for the USD/JPY pair will depend on central bank commentary and inflation figures from Japan and the US. With diminishing expectations of a Fed rate cut in September, US inflation data will play a crucial role in shaping the Fed’s future rate decisions and the USD/JPY exchange rate.

USD/JPY Price Action

The USD/JPY pair has remained above the 50-day and 200-day EMAs, signaling a bullish trend. A breakout above the 157.5 level could propel the pair towards the April 29 high of 160.209. Conversely, a drop below the 155 level might lead to a test of the 50-day EMA and the 151.685 support level.

The 14-day RSI at 60.77 indicates a potential move towards the April 29 high before entering overbought territory. Keep an eye on Bank of Japan and Fed commentary on Monday for further insights into the USD/JPY price action.

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