The retail sales figures have the potential to influence the Federal Reserve’s interest rate decisions. If the retail sales data comes in weaker than expected, it could signal a softer inflation outlook and decrease the likelihood of a Fed rate hike. Economists are forecasting a 0.4% increase in retail sales for April, following a 0.7% rise in March. This data, along with inflation metrics, will be closely monitored by investors to gauge the future path of interest rates.
In addition to economic data, investors will also be paying attention to speeches by FOMC members Neel Kashkari and Michelle Bowman. Their views on the economy and monetary policy could provide further insight into the Fed’s rate path. Any commentary that hints at a potential rate hike or cut could impact the USD/JPY pair.
From a technical perspective, the USD/JPY pair has been trading above the 50-day and 200-day Exponential Moving Averages (EMAs), indicating a bullish trend. A breakout above the 156.5 level could signal a move towards 158, with a potential rally towards the April 29 high of 160.209. However, a drop below 155.5 could bring the 50-day EMA into play, potentially leading to a test of the 151.685 support level.
The upcoming US CPI Report and FOMC member commentary will be crucial for determining the near-term direction of the USD/JPY pair. A stronger-than-expected CPI report could shift investor expectations away from a potential rate cut in September, benefiting the US dollar. On the other hand, intervention chatter to support the Yen could have a contrasting effect on the currency pair.
The USD/JPY pair is currently in a bullish trend, supported by positive technical indicators and potential US economic data. However, the future path of the currency pair will depend on a combination of economic indicators, FOMC member commentary, and market sentiment. Traders should closely monitor these factors to make informed decisions on their USD/JPY positions.