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11
08, 2024
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USD/JPY Forecast: Yen Volatility with Japan’s GDP and US Inflation in FocusGalleryWordPress database error: [Unknown column 'u.validation_failures' in 'SELECT']
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USD/JPY Forecast: Yen Volatility with Japan’s GDP and US Inflation in Focus
Michigan Consumer Sentiment and Consumption
On Friday, August 16, US consumer confidence will spotlight the US economy. Economists expect the Michigan Consumer Sentiment Index to increase from 66.4 in July to 66.7 in August.
A larger-than-expected increase could also support bets on the US avoiding a recession. Rising consumer confidence could boost spending and the US economy. However, investors should also consider subcomponents, including inflation expectations.
Consumers could delay purchases if they think inflation will soften in the near term, impacting consumer spending and the US economy. The Fed could signal a more dovish Fed rate path, lowering borrowing costs and increasing disposable income. Higher disposable income trends could boost spending.
Expert Views on the US Economy and the Fed Rate Path
FOMC member Michelle Bowman commented on inflation, the labor market, and the Fed rate path, stating,
“I am not confident that inflation will decline in the same way as in the second half of last year. Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment.”
While leaving the door open to a Fed rate cut, Bowman also said,
“But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point.”
Softer US inflation and labor market data could bolster the case for multiple 2024 Fed rate cuts. A more dovish Fed rate path may also influence interest rate differentials and support a USD/JPY drop toward 140.
Short-term Forecast: Bearish
Near-term USD/JPY trends hinge on inflation numbers from Japan and the US, and US labor market data. Softer US inflation and labor market data could fuel bets on multiple 2024 Fed rate cuts and push the USD/JPY below 145. Moreover, higher producer prices and private consumption numbers from Japan could raise bets on a Q4 2024 BoJ rate hike and signal a USD/JPY drop toward 140.
Investors should remain alert in another crucial week for the USD/JPY pairing. Monitor real-time data, central bank views, and expert commentary to adjust your trading strategies accordingly. Stay informed with our latest analysis and news to navigate the FX markets.
USD/JPY Price Action
Daily Chart
The USD/JPY remained well below the 50-day and 200-day EMAs, confirming the bearish price trends.
A USD/JPY break above the 148.529 resistance level and trend line could give the bulls a run at 150. Furthermore, a return to 150 could signal a move toward the 151.684 resistance level and the 200-day EMA. Selling pressure could intensify at the 151.685 resistance level. The 200-day EMA is confluent with the resistance level.
Economic data from Japan and the US and central bank chatter require consideration.
Conversely, a drop below the 145.891 support level could bring the 143.495 support level into play. A fall through the 143.495 support level could signal a drop toward the 141.032 support level.
The 14-day RSI at 28.51 shows the USD/JPY in oversold territory. Buying pressure may increase at the 145.891 support level.
