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USD/JPY Price Analysis: Bulls Cheer as US Inflation Data Looms


  • Investors have shifted their focus to the upcoming consumer inflation numbers.
  • Economists are expecting softer US inflation figures this month.
  • Japan’s service sector sentiment fell in May.

The USD/JPY price analysis shows strong bullish sentiment as the dollar strengthens ahead of crucial inflation data. Investors are also gearing up for the Fed policy meeting, where there will be clues on the outlook for interest rate cuts. Meanwhile, the yen remained vulnerable as data revealed poor consumption in Japan due to the weak currency.

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After Friday’s blockbuster US jobs report, investors have shifted their focus to the upcoming consumer inflation numbers. However, the mood ahead of these figures shows that the Fed might delay cuts to November, given the strength of the US labor market. Therefore, the CPI report will either reinforce this view or revive bets for a cut in September.

Economists are expecting softer figures this month after inflation fell the previous month. However, the report may surprise. Policymakers will then conclude their policy meeting, during which they will likely hold rates. Traders will look for clues on the future path of policy, which will be guided by the inflation figures.

On the other hand, the yen remained fragile after Friday’s decline amid a rally in US Treasury yields. Moreover, data on Monday revealed that Japan’s service sector sentiment fell in May as the weak yen increased the cost of living. This indicates that consumption is fragile, complicating the outlook for BoJ rate hikes.

However, a separate report revealed that Japan’s economy contracted at a milder rate than previously reported, relieving the BoJ. Japan’s GDP declined by 1.8% compared to estimates of a 2.0% decline. Still, the weak yen continues to cloud the economy’s outlook.

USD/JPY key events today

Neither Japan nor the US will release high-impact reports. As a result, the pair might consolidate.

USD/JPY technical price analysis: Bulls approaching 157.50

USD/JPY technical price analysis
USD/JPY 4-hour chart

On the technical side, the USD/JPY price is approaching the 157.50 resistance level after finding support near the 155.00 level. Moreover, it has made a series of higher highs and lows that confirm a bullish trend. 

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Bullish momentum recently surged, allowing the price to break above the 30-SMA and the RSI above 50. Given the solid bullish bias, the price might soon break above 157.50 to make a new high and retest its bullish channel resistance.

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