- USD/JPY is trading steady in the 141.80 area after reaching its highest point since November 2022.
- US stock and bond markets are closed for Juneteenth celebrations.
- Eyes on US economic data, Chairman Powell’s Wednesday testimony.
USD/JPY retreated slightly to the 141.80 area on Monday after hitting a multi-month high on Friday. US traders are celebrating Juneteenth and the markets are relatively quiet. Investors appear to be consolidating gains after the USD/JPY pair rose more than 100 pips on Friday. The week’s focus continues to be on US economic data, released during the next sessions, Chairman Powell’s testimony before the US Congress and the Bank of Japan (BoJ) on Tuesday.
Economic data to start shaping July Fed decision, eyes on BoJ minutes
Last Wednesday, Jerome Powell said that the Federal Reserve System (Fed) had decided on a pause in growth and that officials needed more information to assess its implications Monetary Policy. In this sense, their expectations for the next July meeting may influence the US housing data, which will be released on Tuesday, followed by Jobless Claims and S&P PMI on Thursday and Friday. In addition, Chairman Powell’s testimony before Congress on Wednesday may cause some reaction in USD price dynamics.
So far, according to the CME FedWatch tool, investors are betting on a 75% probability Fed up 25 basis points (bps) to a range of 5.25%-5.50% on 26 July.
On the other hand, the BoJ will publish the minutes of its Friday meeting on Tuesday, where investors will improve view the bank’s stance on monetary policy, which could potentially affect the yen.
USD/JPY levels to watch
USD/JPY has a short-term bullish outlook on the daily chart. The Relative Strength Index (RSI) and Moving Average Divergence (MACD) are both in positive territory, and the pair is trading above its major moving averages, indicating that buyers are calling the shots.
If USD/JPY manages to move higher, the next resistances to watch are in the 142.00 zone, followed by the 142.50 area and the 143.00 zone. On the downside, the 141.50 area is an immediate support level USD/JPY. A break below this level could pave the way to the 20-day simple moving average (SMA) in the area of 139.90 and then to the 139.20 zone.