Higher-than-expected wages could increase disposable income and consumer spending. Upward trends in consumer spending could fuel demand-driven inflation. A more hawkish rate path would raise borrowing costs and reduce disposable income.

However, consumer confidence trends also need consideration. Economists expect the CB Consumer Confidence Index to decline from 104.7 to 104.0 in April.

Weaker-than-expected numbers could signal a pullback in consumer spending. A weaker outlook for spending would signal a softer inflation outlook and support investor expectations of a September Fed rate cut. The CB Consumer Confidence Index offers a forward looking view on consumption and may impact the USD/JPY more.

Other stats include house price data and Chicago PMI numbers. However, these will likely play second fiddle to the wage and consumer confidence figures.

Short-term Forecast

Near-term trends for the USD/JPY hinge on the US economic data and the FOMC press conference. Upbeat numbers and a hawkish Fed could tilt monetary policy divergence toward the US dollar. However, Japanese government interventions could overshadow the effects of the US economic calendar on the USD/JPY.

USD/JPY Price Action

Daily Chart

The USD/JPY hovered comfortably above the 50-day and 200-day EMAs, affirming the bullish price signals.

A USD/JPY return to the 158 handle would support a move to the April 29 high of 160.209.

Bank of Japan commentary, Japanese government interventions, and the US economic calendar need consideration.

Conversely, a USD/JPY drop below the 155 handle could give the bears a run at the 50-day EMA and the 151.685 support level.

The 14-day RSI at 66.10 suggests the USD/JPY could return to 158 before entering overbought territory.