Beyond the numbers, the Fed will remain in focus. FOMC member Mary Daly is on the calendar to speak. As a voting member of the Committee, views on inflation, the economic outlook, and the timing of interest rate cuts could move the dial.

Short-term Forecast

Near-term trends for the USD/JPY depend on household spending numbers from Japan and Fed chatter. Weaker-than-expected household spending trends could impact hopes of a BoJ rate hike. In contrast, Fed speakers remain concerned about US inflation, tilting monetary policy divergence toward the US dollar. However, investors should monitor for intervention threats.

USD/JPY Price Action

Daily Chart

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

A USD/JPY breakout from the 156 handle could support a move toward the 158 level. A break above the 158 handle could give the bulls a run at the April 29 high of 160.209.

The Bank of Japan Summary of Opinions, US jobless claims, the Fed, and intervention chatter need consideration.

Alternatively, a USD/JPY drop below 155 would bring the 50-day EMA into play. A break below the 50-day EMA could signal a drop to the 151.685 support level.

The 14-day RSI at 57.05 indicates a USD/JPY move to the 160 handle before entering overbought territory.