“They won’t be able to hike again, at least for the rest of the year. It’s a toss-up whether they can do one hike by next March.”
US Economic Calendar
Later in the session on Monday, the US Leading Economic Index (LEI) may influence US dollar demand.
Economists forecast the LEI to fall by 0.3% in July after a 0.2% decline in June. A larger-than-expected fall may rekindle fears of a hard landing, supporting a USD/JPY move toward 145. The LEI offers insights into the US economic outlook, affecting sentiment toward the Fed rate path.
Beyond the economic data, FOMC member commentary also needs consideration. Voting member Christopher Waller will speak on Monday. In July, Waller stated that favorable CPI Reports could support a rate cut soon. A shift in stance regarding interest rate cuts could affect US dollar demand amid speculation about multiple 2024 Fed rate cuts.
Expert Views on the Fed Rate Path
Arch Capital Global Chief Economist Parker Ross remarked on the US CPI Report and the Fed rate path, stating,
“Core services inflation (0.31% m/m) – the sticky component the Fed has been worried about – bounced back in July from its weakest monthly reading since 2021.”
Short-term Forecast: Bearish
USD/JPY trends will depend on the US LEI, central bank forward guidance, and Services PMI numbers. Support for a Q4 2024 BoJ rate hike could pull the USD/JPY toward 145. Weak stats from the US and a more dovish FOMC may also signal a drop toward 145.
Investors should remain alert. Monitor real-time data, central bank insights, and expert commentary to adjust your trading strategies accordingly. Stay updated with our latest news and analysis to manage USD/JPY volatility.
USD/JPY Price Action
Daily Chart
The USD/JPY remained well below the 50-day and 200-day EMAs, affirming bearish price signals.
A USD/JPY break above the 148.529 resistance level and the top trend line would support a return to 150. Furthermore, a breakout from 150 could give the bulls a run at the 200-day EMA and the 151.685 resistance level. Selling pressure may intensify at the 151.685 resistance level as the 200-day EMA is confluent with the resistance level.
Economic indicators from the US and central bank commentary require consideration on Monday.
Conversely, a fall through 147.500 could signal a fall toward the 145.891 support level. A break below the 145.891 support level may bring the 143.495 support level into play.
The 14-day RSI at 39.06 indicates a USD/JPY drop below 147 before entering oversold territory.
