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Category: Forex News

USD/JPY Forecast: Yen Weakness Sparks Intervention Concerns Ahead of Fed Talks

Moreover, US housing sector data also needs consideration. Economists consider housing sector data as a leading indicator for the US economy.

Upward trends in housing sector-related data could signal a pickup in consumer confidence. Consumer confidence could fuel consumer spending and demand-driven inflation. Demand-driven inflationary pressures could leave the Fed in a holding pattern. A higher-for-longer rate path may reduce disposable income and curb consumer spending.

Economists forecast new home sales to increase by 3.0% in February after rising by 1.5% in January.

Beyond the numbers, investors must track Fed chatter. FOMC members Lisa Cook and Raphael Bostic are on the calendar to speak. Deviations from the FOMC Economic Projections could move the dial.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on inflation numbers and central bank chatter.

This week, inflation numbers from Japan and the US will impact the BoJ and Fed rate paths. However, hotter-than-expected inflation numbers from the US could tilt monetary policy divergence toward the US dollar. Interest rate differentials and the outlook for carry trades support the USD/JPY at current levels.

USD/JPY Price Action

Daily Chart

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

A USD/JPY break above the 151.685 resistance level would support a move to the 152 handle.

Intervention chatter, US economic data, and Fed comments need consideration.

Conversely, a USD/JPY fall through the 150 handle could give the bears a run at the 50-day EMA and the 148.529 support level.

The 14-day RSI at 64.45 suggests a USD/JPY move to the 152 handle before entering overbought territory.

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