- There is a 39% chance that the BoJ will hike on Tuesday.
- The Fed will meet on Wednesday and likely hold rates.
- There is a 57% chance the Fed will cut interest rates in June.
The USD/JPY forecast shows a slight upside potential, with the currency steady ahead of central bank meetings in Japan and the US. While the Fed will likely maintain its current rates, all eyes are on the Bank of Japan, with a 39% chance of a hike on Tuesday.
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Notably, the dollar strengthened last week due to upbeat economic data that weakened the case for a Fed rate cut in June. This led to a decline in the yen that extended to this week. When last week began, markets had been hopeful that the Fed would cut rates after Powell’s dovish testimony to Congress. However, data during the week revealed higher-than-expected consumer and producer prices, leading to a decline in rate-cut bets.
Therefore, investors will focus on the economic projections and the press conference when the Fed meets on Wednesday. Policymakers might sound less dovish after the surprising inflation reports. If this is the case, bets for a cut in June will fall further. Currently, there is a 57% chance the Fed will cut interest rates in June.
Meanwhile, the outlook for rate hikes in Japan brightened on Friday. Companies in Japan agreed to big wage increases that will likely pave the way for interest rate hikes. The Bank of Japan will meet on Tuesday, and there is a chance it will hike rates.
USD/JPY key events today
The pair will likely consolidate ahead of the central bank meetings as there are no key economic releases today.
USD/JPY technical forecast: Price confronts strong resistance at the 0.618 Fib
On the technical side, the USD/JPY price is trading at a strong resistance zone comprising the 0.618 Fib and 149.01 key levels. Moreover, the bullish bias is strong, with the price well above the 30-SMA and the RSI near the overbought region.
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However, the price might reverse at the strong resistance zone after such a steep move. Still, a pullback would likely retest the 30-SMA support before the bullish move continues higher. If the price breaks above the 0.618 Fib, it might climb to the 150.75 resistance level. On the other hand, bears might return if the price breaks below the 30-SMA.
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- Source: https://www.forexcrunch.com/blog/2024/03/18/usd-jpy-forecast-holds-ground-ahead-of-boj-fed/
