- Taking a closer look at the performance of the USD/JPY currency pair on the daily timeframe chart below, it becomes clear that the USD price is consolidating bullishly in a consolidation zone.
- The USD is awaiting Japanese intervention in the forex markets or abandoning it, and consequently, the USD/JPY currency pair completes a stronger upward path.
- According to forex trading platforms, the USD/JPY price is around the 157.14 resistance level at the time of writing this analysis.
According to this week's economic calendar data, the Federal Reserve's core inflation gauge is about to show some modest relief from stubborn price pressures, reinforcing the wisdom of central bank governors regarding the timing of interest rate cuts. Accordingly, economists expect the US PCE excluding food and energy prices - due out on Friday - to rise by 0.2% in April. Consequently, this would represent the smallest gain so far this year for this measure, which provides a better picture of core inflation.
Overall, the PCE price index is expected to rise 2.7% year-on-year, while the core measure is expected to reach 2.8% – both in line with the previous month's levels.
Officials met earlier this month on the desire to keep interest rates higher for longer and “many” questioned whether policy was restrictive enough to bring inflation down to their target, according to minutes of their latest meeting. In general, the latest inflation figures will be accompanied by personal spending and income figures. While demand grew at a strong pace in the first quarter, data will report on services spending after previously reported April retail sales stabilized.
Other economic data this week includes revised first-quarter GDP on Thursday. Moreover, economists expect growth may slow from the government's initial estimate. On Wednesday, the Federal Reserve will release a Beige Book summary of economic conditions across the country. Meanwhile, among the US central bankers who spoke during the holiday-shortened week were John Williams, Lisa Cook, Neel Kashkari, and Lori Logan.
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USD/JPY Technical analysis and Expectations Today:
The USD/JPY currency pair continues to trade at a few levels above the 100-hour moving average line. However, it seems that the currency pair still has plenty of room to rise before reaching the overbought levels of the Relative Strength Index on the 14-hour frame. In the near term, and according to the performance on the hourly chart, it appears that the USD/JPY currency pair is trading within an ascending channel. However, it appears that the RSI on the 14-hour frame still has room to move before reaching overbought levels. Therefore, the bulls will look to extend the current winning streak towards 157.49 or higher to the 158.03 resistance. On the other hand, the bears will look to pounce on pullbacks at around 156.48 or lower at the 156.00 support.
In the long term, and according to the performance on the daily chart, it also appears that the USD/JPY currency pair is trading within an upward channel. Also, the 14-day RSI rose to trade near overbought conditions, supporting a bullish bias. Therefore, bulls will target long-term profits at around 160.15 or higher to 163.07 resistance. On the other hand, the bears will look to pounce on profits at around 153.52 or lower at the 150.00 support.
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