Better-than-expected numbers could support investor expectations the US economy will avoid a recession. However, the numbers are unlikely to influence the Fed’s interest rate trajectory. The US Personal Income and Outlays Report (Fri) will impact bets on a September Fed rate cut.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on inflation numbers from Japan and the US and the Bank of Japan. Softer-than-expected inflation numbers from Japan could allow the Bank of Japan to support a zero-interest rate environment over the near term.

Sticky US inflation numbers and upward trends in personal income and spending could tilt monetary policy divergence further toward the US dollar.

USD/JPY Price Action

Daily Chart

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

A USD/JPY breakout from the April 23 high of 154.874 could give the bulls a run at the 155 handle.

Investors should consider the Bank of Japan, intervention chatter, and US core durable goods orders.

Conversely, a USD/JPY fall through the 154 handle could signal a drop toward the 151.685 support level.

The 14-day RSI at 75.43 shows the USD/JPY in overbought territory. Selling pressure will likely increase at the April 23 high of 154.874.