- The recent impact of central bank policy shift signals on the USD/JPY pair makes this trading week important for determining the direction of the dollar/yen pair in the coming days.
- For five consecutive trading sessions, the USD/JPY pair has been moving in an upward correction path.
- Gains are reaching the 149.30 resistance level and stabilizing around it at the time of writing the analysis.
- This is ahead of the announcement of the US Federal Reserve's policy decisions later this week.
According to the economic calendar data, the most important factor that will affect the US dollar this week will be the US Federal Reserve announcement. With the release of inflation and payroll data, the next major event facing the US dollar is the March monetary policy decision, due out on Wednesday at 6:00 pm GMT. Prospectively, the Fed is to keep US interest rates unchanged, which is likely to be reflected in the recent "steadiness" of US inflation and strong data results.
Meanwhile, the extent to which the Fed's tone is hawkish on the need to keep US interest rates steady will be interesting and could pose upside risks for the US dollar. Additionally, the Fed's new economic outlook and interest rate projections (dot plot) pose additional upside risks for the US dollar.
According to analysts, “The price of the US dollar could be going through a better time.” The Fed's average point for cuts of -75 basis points in 2024 is tenuous, and only takes two officials to back off. Thus, after two consecutive strong CPI readings, the March and April readings will be released before it is released. The June meeting should be printed more dovish decisively to give officials the confidence to ease."
Clearly, the key for markets will be any indications that more stable US inflation, a more resilient real economy and easier financial conditions will be seen by Fed officials as calling for somewhat less aggressive easing from here. Consequently, to the extent that this grants the US dollar interest rate some appeal. Thus, if we get a boost, the currency could regain its strength on a broader scale.
USD/JPY Technical analysis and Expectations Today:
According to the performance on the daily chart, the price of the US dollar against the Japanese yen (USD/JPY) is moving in the path of an upward channel. The bulls’ control over the trend will strengthen if it settles above the psychological resistance of 150.00. Any hawkish tone by the US Federal Reserve this week will be a catalyst for the bulls to move to the next resistance. The most important is 151.50. Moreover, if the US Central Bank abandons its tightening tone, the recent gains of the dollar/yen may evaporate, and a return to the 147.60 support again is not ruled out. Generally, we still prefer to buy the USD/JPY pair from every falling level.
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