The Bank of Japan is set to announce its interest rate decision on Friday, with expectations leaning towards no change in rates. The focus will be on the monetary policy statement and press conference, where discussions on inflation, economic outlook, and potential rate hikes may take place.
In the US, the CPI Report on Wednesday will be closely watched by investors. Analysts predict annual inflation to remain at 3.4% in May, with core inflation expected to soften slightly. Any surprises in the inflation figures could impact bets on a September Fed rate hike.
The Fed is also expected to keep interest rates unchanged on Wednesday, with Fed Chair Powell’s remarks during the press conference likely to influence market sentiment. Producer prices and initial jobless claims on Thursday will add to the economic data to be considered.
Consumer sentiment figures on Friday will provide insights into consumer spending trends, which could affect inflation expectations and the possibility of a Fed rate cut. FOMC member speeches by John Williams and Austan Goolsbee will also be monitored by investors.
The short-term forecast for the USD/JPY pair will depend on the outcome of the FOMC and BoJ decisions, as well as economic projections and press conferences. A more dovish Fed outlook and a hawkish BoJ stance could drive the pair towards lower levels.
On the daily chart, the USD/JPY is currently above key moving averages, indicating bullish trends. A break above the 160 handle could lead to further gains, while a drop below the 50-day EMA may signal a move towards support levels. The RSI suggests potential for further upside before reaching overbought territory.