Investors should keep an eye on the Michigan Inflation Expectations Index, as it may impact their expectations of a September Fed rate cut. The FOMC recently revised its Core PCE inflation projection for 2024, indicating a potential increase. Additionally, comments from FOMC Member Austan Goolsbee regarding inflation and the Fed rate path could also influence market sentiment.
In the short term, the USD/JPY trends will be influenced by the upcoming Bank of Japan monetary policy decision. Any changes in JGB purchases could affect the monetary policy divergence between the US dollar and the Japanese yen. US economic data and comments from FOMC members will also play a role in shaping buyer demand for the USD/JPY.
Looking at the USD/JPY price action, the currency pair has remained above the 50-day and 200-day EMAs, indicating a bullish trend. A break above 157.5 could lead to a move towards the 159 handle, with a potential climb to the April 29 high of 160.209. On the other hand, a drop below the 156 handle could signal a move towards the 50-day EMA and potentially the 151.685 support level.
The 14-day RSI currently stands at 55.71, suggesting a potential rise in the USD/JPY towards the April 29 high before entering overbought territory. It is important for investors to closely monitor the Bank of Japan decision, US consumer sentiment, and any Fed commentary to stay informed on the currency pair’s movements.