US Dollar Forecast: USD/JPY Reverses Ahead of May High
USD/JPY reverses ahead of the May high (148.65) to snap the recent series of higher highs and lows.
Share this:
US Dollar Outlook: USD/JPY
USD/JPY reverses ahead of the May high (148.65) to snap the recent series of higher highs and lows, but data prints coming out of the US may influence the exchange rate as the Personal Consumption Expenditure (PCE) Price Index is anticipated to show persistent inflation.
US Dollar Forecast: USD/JPY Reverses Ahead of May High
USD/JPY seems to be unfazed by the semi-annual testimony from Federal Reserve Chairman Jerome Powell as he endorses a wait-and-see approach in front of US lawmakers, with the prepared remarks stating that the central bank is ‘well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.’
US Economic Calendar
It seems as though the Federal Open Market Committee (FOMC) is in no rush to implement lower interest rates as Chairman Powell reiterates that ‘increases in tariffs this year are likely to push up prices and weigh on economic activity,’ and an uptick in the core PCE, the Fed’s preferred gauge for inflation, may keep the central bank on the sidelines as the economy shows little signs of a looming recession.
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
In turn, signs of sticky price growth may lead to a bullish reaction in the US Dollar as it curbs speculation for an imminent Fed rate-cut, but a softer-than-expected PCE report may produce headwinds for the Greenback as it raises the Fed’s scope to further unwind its restrictive policy.
With that said, USD/JPY may continue to give back the advance from the monthly low (142.38) as it snaps the bullish price series carried over from last week, but swings in the carry trade may keep the exchange rate within the May range as both the Fed and Bank of Japan (BoJ) keep interest rates on hold.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY falls to a fresh weekly low (144.85) after struggling to close above 147.10 (38.2% Fibonacci retracement), and lack of momentum to hold above the 144.40 (23.6% Fibonacci retracement) to 144.60 (50% Fibonacci extension) region may lead to a test of the monthly low (142.38).
- Failure to defend the May low (142.12) may push USD/JPY toward the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone, but USD/JPY may trade within a defined range if it holds above the monthly low (142.38).
- Need a move above 145.90 (50% Fibonacci extension) to bring 147.10 (38.2% Fibonacci retracement) back on the radar, with the next area of interest coming in around the May high (148.65).
Additional Market Outlooks
EUR/USD Faces Fed Chair Powell Testimony
GBP/USD Rebound Emerges amid Failure to Close Below 50-Day SMA
USD/CHF Recovery Persists Ahead of SNB Rate Decision
Canadian Dollar Forecast: USD/CAD Reverses Ahead of October Low
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Japanese Yen Technical Analysis: USD/JPY Support Test into Core PCE
USD/JPY has been a battlefield for the past two months as the force of intervention and the threat of more have given sellers an advantage, even as buyers have continued to bid support on pullbacks. This sets the stage for a massive finish to the week with Core PCE and Non-farm Payrolls.
EUR/USD, USD/JPY Outlook: Oil, yields and an FX identity crisis
Crude oil is setting the tone across rates and FX, leaving EUR/USD vulnerable and USD/JPY caught between higher Treasury yields and the growing threat of intervention
USD into a Massive Week as Yields Fly and Gold Breaks
It’s a huge week with PCE and NFP, but it’s what’s happening off of the calendar that demands attention with US yields flying to fresh multi-decade highs.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.