Furthermore, investors should also consider the Michigan Inflation Expectations Index. On Wednesday (June 12), the FOMC revised its Core PCE inflation projection for 2024 from 2.4% to 2.6%. An upward trend in the Michigan Inflation Expectations Index could influence investor expectations of a September Fed rate cut.

Beyond the numbers, investors should monitor FOMC Member commentary. FOMC Member Austan Goolsbee is on the calendar to speak. Comments regarding inflation and the Fed rate path could move the dial.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on the Bank of Japan monetary policy decision. A cut to JGB purchases could tilt monetary policy divergence toward the US dollar. However, US data and FOMC member comments will also influence buyer demand for the USD/JPY.

USD/JPY Price Action

Daily Chart

The USD/JPY remained well above the 50-day and 200-day EMAs, confirming the bullish price trends.

A USD/JPY break above 157.5 would support a move toward the 159 handle. A climb to 159 could give the bulls a run at the April 29 high of 160.209.

The Bank of Japan decision on monetary policy, US consumer sentiment, and Fed chatter require investor attention.

Conversely, a USD/JPY fall through the 156 handle could signal a drop toward the 50-day EMA. Furthermore, a break below the 50-day EMA could give the bears a run at the 151.685 support level.

The 14-day RSI at 55.71 suggests a USD/JPY rise to the April 29 high of 160.209 before entering overbought territory.