US Economic Calendar: FOMC Members and Fed Rate Cut Bets
Later in the Monday session, investors should track comments from Fed speakers. Comments relating to inflation, the economic outlook, and interest rates warrant investor attention.
Last week, the FOMC Meeting Minutes, labor market data, and the US Services PMI reduced investor expectations of a September Fed rate cut.
Michigan Inflation Expectations numbers provided brief relief. Nevertheless, Michigan Inflation Expectations increased from 3.2% to 3.3% in May, well above the 2% target.
The CME FedWatch Tool reflected the effects of the Fed Minutes and economic indicators on investor expectations of a September rate cut. In the week ending May 24, the chances of the Fed leaving interest rates unchanged increased from 35.2% to 50.2%.
On Friday (May 31), the US Personal Income and Outlays Report could change the narrative. Softer inflation numbers and a pullback in personal income/spending could refuel investor bets on a September Fed rate cut.
Short-term Forecast
Near-term trends for the USD/JPY will hinge on central bank chatter and inflation numbers from Japan and the US. Amidst falling bets on a Fed September rate cut, US inflation numbers on Friday will influence the Fed rate path and the USD/JPY.
USD/JPY Price Action
Daily Chart
The USD/JPY remained comfortably above the 50-day and 200-day EMAs, affirming the bullish price signals.
A USD/JPY breakout from the 157.5 handle could support a move toward the April 29 high of 160.209.
On Monday (May 27), Bank of Japan and Fed commentary need consideration.
Conversely, a USD/JPY fall through the 155 handle could give the bears a run at the 50-day EMA. A break below the 50-day EMA would bring the 151.685 support level into play.
The 14-day RSI at 60.77 suggests a USD/JPY return to the April 29 high of 160.209 before entering overbought territory.
