The upcoming retail sales figures are expected to have a significant influence on the Federal Reserve’s rate path. A weaker-than-expected retail sales report could indicate a softer inflation outlook, potentially reducing the likelihood of a Fed rate hike in the near future. With economists forecasting a modest increase of 0.4% in April following a 0.7% rise in March, the market will closely monitor these figures for any signs of divergence.
In addition to retail sales data, the commentary from FOMC members Neel Kashkari and Michelle Bowman will also play a crucial role in shaping investor sentiment. Any insights into the Fed’s stance on monetary policy could lead to fluctuations in the USD/JPY pair as traders reevaluate their positions based on these remarks.
The near-term trends for the USD/JPY pair will largely hinge on the forthcoming US CPI Report and FOMC member commentary. A higher-than-anticipated CPI reading could diminish expectations of a Fed rate cut and bolster the US dollar against the Yen. Conversely, intervention chatter to support the Yen and retail sales figures could introduce volatility into the currency pair.
From a technical standpoint, the USD/JPY pair has remained well above the 50-day and 200-day EMAs, indicating a bullish trajectory. A potential breakout above the 156.5 handle could pave the way for a move towards the 158 level, with further upside potential towards the April 29 high of 160.209. However, failure to maintain support above 155.5 could bring the 50-day EMA into play, potentially triggering a bearish momentum towards the 151.685 support level.
The outlook for the USD/JPY pair is heavily dependent on upcoming economic data releases, FOMC commentary, and technical indicators. Traders should remain vigilant and adapt their strategies accordingly to navigate the potential volatility in the currency pair.