The recent US Jobs Report has had a significant impact on the USD/JPY exchange rate, pushing it closer to the 157 level. With the US CPI Report on the horizon, investors are closely watching for potential shifts in the value of the Japanese Yen.
The increase in average hourly earnings by 4.1% year-on-year in May has the potential to boost disposable income, leading to higher consumer spending. This could result in demand-driven inflation, affecting the monetary policy decisions of the Federal Open Market Committee (FOMC). The possibility of a rate hike by the Federal Reserve later in the year is also contributing to the fluctuation in the USD/JPY exchange rate.
The FOMC is expected to maintain interest rates at 5.50% in the upcoming meeting. However, the possibility of a rate hike in September remains on the table. A hawkish economic outlook by the FOMC could strengthen the US dollar, potentially leading to a rise in the USD/JPY exchange rate.
From a technical perspective, the USD/JPY has held above the 50-day and 200-day Exponential Moving Averages (EMAs), indicating a bullish trend. A move towards the 158 level could open up opportunities for further gains, approaching the April 29 high of 160.209. However, a downward movement below the 50-day EMA could signal a decline towards the 151.685 support level.
The Bank of Japan’s response to the Q1 2024 GDP Report will also play a crucial role in determining the future movement of the USD/JPY exchange rate. Any indications of a potential rate hike by the BoJ could influence market sentiment, leading to shifts in the currency pair.
The upcoming US CPI Report, FOMC meeting, and Bank of Japan policies will continue to drive the USD/JPY exchange rate in the near term. Investors should closely monitor economic data releases and central bank decisions to make informed trading decisions. Technical indicators suggest a potential bullish movement in the USD/JPY, but external factors could alter the currency pair’s trajectory in the coming weeks.