The USD/JPY pair has been on an upward trend for the fourth consecutive day, reaching a high near 157.15 during early Asian trading hours on Wednesday. This positive momentum has been driven by a sense of caution among traders, who are waiting on the sidelines for key events to unfold in the market.
Two major events that will significantly impact the USD/JPY trading are the US Consumer Price Index (CPI) data release and the Federal Reserve (Fed) interest rate decision, both scheduled for Wednesday. The US CPI data is expected to show a considerable increase, with projections of 3.4% YoY in May. This data will provide crucial insights into the state of inflation in the US economy, which in turn will influence the Fed’s decision on interest rates.
The recent stronger-than-expected US jobs data has led to speculations that the Fed might maintain higher interest rates for a longer period, providing some support for the US Dollar. However, market players are eagerly awaiting the outcome of the FOMC monetary policy meeting, as well as the press conference, to get a clearer picture of the Fed’s stance on interest rates.
On the other side, the Bank of Japan (BoJ) is expected to keep its short-term policy rate steady at 0-0.1% at its June meeting on Friday. However, there are indications that the BoJ might start tapering its monthly bond buying program, which currently stands at around 6 trillion yen ($38 billion). This development could have repercussions on the JPY’s performance in the market.
The USD/JPY trading scenario is currently marked by a cautious optimism, with traders closely monitoring key events such as the US CPI data release, the Fed interest rate decision, and the BoJ meeting. The market remains sensitive to any surprises or deviations from the projected outcomes of these events, which could lead to significant fluctuations in the USD/JPY pair’s price. It is essential for traders to stay informed and adapt their strategies accordingly to navigate the dynamic market conditions.