Since the start of trading this week, the price of the USD/JPY has been trying to rebound higher. Moreover, its gains have not exceeded the resistance level of 146.58 before stabilizing around 145.50 at the time of writing the analysis. Currently, markets and investors are awaiting confirmation from the US Federal Reserve today on the future of its monetary policy in the coming months. Today, it is expected to keep US interest rates unchanged, and eyes will be cautious towards the content of the US Federal Reserve's policy statement and the statements of its governor, Jerome Powell.
On the other hand, after a Reuters report on Friday that the recent statements of Central Bank of Japan Governor Ueda regarding exit options from politics were not intended to hint at the timing of a possible exit, another report came to hurt the yen on Monday. This time, the Bloomberg report was saying that the Bank of Japan does not see an urgent need to end negative interest rates this month. Also, the sources added that Bank of Japan officials believe that the potential cost of waiting for more information to confirm strong wage growth is not very high. Clearly, this may mean that the upcoming BOJ meeting is unlikely to hint at an imminent shift and may merely be a repeat of the position revealed last time. Nevertheless, the Japanese Yen is in first place today against the other major currencies. Thus, that’s indicating that the USD/JPY may be among the most volatile pairs after the Fed announced its decision.
Yesterday, it was announced that the US inflation rate declined again last month, as the decline in gas prices helped mitigate the blow of price increases in the United States. Meanwhile, the latest data on consumer inflation showed that prices in some areas — services such as rents, restaurants, and car insurance — continued to rise at an uncomfortable pace. Moreover, the Labor Department report added that the Consumer Price Index rose by only 0.1% from October to November. Compared with the previous year, prices rose 3.1% in November, down from a 3.2% year-on-year rise in October.
But core prices, which exclude volatile food and energy costs, rose 0.3% from October to November, slightly faster than the 0.2% increase the previous month. Compared to last year, core prices rose by 4%, the same level as in October. The Federal Reserve considers core prices to be a better guide to the path of future inflation.
Predominantly, the stability of inflation in the services sector of the economy is likely to keep the US Federal Reserve on guard against inflation during its meeting this week. Recently, Federal Reserve Chairman Jerome Powell has been scrutinizing such costs as a guide to whether underlying inflationary trends are cooling.
Generally, U.S. inflation continues to be higher than the Federal Reserve's target of 2%. While Powell expressed optimism about the slowdown in inflation, he said earlier this month that it is "premature". Assuming that, the Federal Reserve has finished raising the benchmark interest rate or speculating about interest rate cuts, something many in Wall Street expect to happen early in the spring.
USD/JPY Technical Analysis and Expectations Today:
According to the performance on the daily chart below, the price of the US dollar against the Japanese yen (USD/JPY) is still in the stage of breaking the general upward trend. Obviously, the strengthening of the bears’ control depends on disappointing signs for the US dollar of the cessation of tightening the US Central Bank’s policy. Accordingly, the dollar/JPY selling operations may return. USD/JPY returning to support at 142.00 may be possible. Moreover, it must be considered that any strong decline in the currency pair is an opportunity to think about returning to buying, as the date for tightening the Japanese central bank’s policy is ambiguous. On the other hand, over the same period, the return of the bulls with the currency pair above the 147.50 resistance. Thus, it will give investors the opportunity to move towards the psychological resistance 150.00 again.
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