There was a significant increase in US consumer confidence from 97.5 to 102.0 in May, leading to a rise in the dollar and US yields. This resulted in a decrease in the yen as the interest rate gap between Japan and the US widened. BoJ’s Seiji Adachi mentioned the possibility of a rate hike due to the weak yen, causing some fluctuations in the USD/JPY forecast.
Despite reaching a 4-week high initially, the pair pulled back after the Bank of Japan hinted at a potential rate hike in the near future. The yen strengthened slightly following Adachi’s comments, despite ongoing challenges with Japan’s economic demand. Analysts anticipate another rate hike by the BoJ in July.
On the technical side, the USD/JPY price is trading between the 156.50 support and the 158.01 resistance levels, maintaining a bullish bias above the 30-SMA. However, momentum remains weak, with the price hovering near the SMA and the RSI failing to reach overbought levels. If bulls maintain control, the price could reach the 158.01 resistance, but a shift in momentum could see a break below the support level at 156.50.