With inflation in focus, consumer spending trends also need consideration. Upward trends in consumer spending could fuel demand-driven inflation. A higher-for-longer Fed rate path may reduce disposable income, curb consumer spending, and dampen demand-driven inflation.

Economists forecast retail sales to increase by 0.8% in February after falling by 0.8% in January.

Other stats include weekly jobless claims. However, barring an unexpected spike in jobless claims, the focus will be on producer prices and retail sales.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on US data, wage negotiations in Japan, and the Bank of Japan. Weaker-than-expected US data and BoJ support for a pivot from negative rates could tilt monetary policy divergence toward the Yen. The wage report on Friday could be pivotal.

USD/JPY Price Action

Daily Chart

The USD/JPY hovered below the 50-day EMA while remaining above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

A breakout from the 50-day EMA and the 148.529 resistance level could give the bulls a run at the 151.685 resistance level. However, selling pressure could intensify at the 148.529 resistance level. The 50-day EMA is confluent with the resistance level.

BoJ reaction to wage negotiations and the US economic calendar need consideration.

Conversely, a USD/JPY drop below the 147.500 handle would bring the 145.891 support level and the 200-day EMA into play.

The 14-day RSI at 40.73 indicates a USD/JPY drop to the 145.891 support level before entering oversold territory.