The recently released economic data showing better-than-expected numbers has provided some support to investor expectations that the US economy will manage to steer clear of a recession. This positive news is likely to have a certain impact on investor sentiment, at least in the immediate future. However, it is important to note that these numbers are unlikely to have a significant influence on the Federal Reserve’s interest rate trajectory.
All eyes are now turning to the upcoming US Personal Income and Outlays Report scheduled for Friday. This report is expected to play a crucial role in shaping expectations regarding a potential Fed rate cut in September. The outcome of this report could set the tone for the market moving forward and will be closely monitored by investors and analysts alike.
Several key factors are at play when it comes to determining the near-term trends for the USD/JPY currency pair. Inflation numbers from both Japan and the US, as well as any potential actions by the Bank of Japan, will have a significant impact on the performance of the pair in the coming days. It is worth noting that softer-than-expected inflation numbers from Japan could provide the Bank of Japan with the necessary support to maintain a zero-interest rate environment over the near term.
From a technical analysis standpoint, the USD/JPY pair has managed to stay comfortably above both the 50-day and 200-day Exponential Moving Averages (EMAs). This reaffirms the bullish price signals that have been observed in recent trading sessions. Moreover, a potential breakout above the April 23 high of 154.874 could give the bulls a clear path towards the key psychological level of 155.
Investors keen on trading the USD/JPY pair should pay close attention to key levels such as the 154 handle. A breach below this level could signal a move towards the 151.685 support level. Additionally, the Relative Strength Index (RSI) currently stands at 75.43, indicating that the USD/JPY pair is in overbought territory. This could lead to an increase in selling pressure, especially around the April 23 high.
While economic data and technical analysis provide valuable insights into market trends, it is crucial for investors to exercise caution and stay informed about upcoming events that could potentially impact the performance of the USD/JPY currency pair.
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