USD/JPY Zigzag Amid Mixed Signal

Fundamental Analysis

* Fed Hawk: The USD/JPY initially dropped from its peak but later recovered somewhat as the market continued to digest soft U.S inflation data alongside the Fed hawkish stance. The latest US Consumer Price Index (CPI) unchanged in May, the first time since last June, and decreased to 3.3% annually from April’s 3.4%. However, the Fed’s monetary policy statement underscored their view that they won’t consider reducing rates until they see more consistent progress towards their 2% inflation target. They also emphasized readiness to adjust policy if risks arise that could affect their goals. Moreover, the Summary of Economic Projections (SEP) revealed a slightly more hawkish outlook, with policymakers now expecting the federal funds rate to reach 5.10% by the end of 2024, up from 4.60% in their March projections.

Technical Analysis

* Technical Breakout: USDJPY was traded lower while recently retreated from its high. MACD which illustrate bearish momentum signal suggest the pair could further extend its retracement.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 155.40. Conversely, a potential continuation is also to be expected and the price could head back towards 158.10.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will be closely monitoring the results of the highly anticipated two-day BoJ meeting, set to be announced on Friday. Additionally, US data such as Producer Price Index and Initial Jobless Claims will be also a focal point, offering potential short-term trading opportunities.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.