USDJPY 290324 3 Minute Chart
After the inflation and retail sales figures, investors must continue monitoring Bank of Japan commentary. In recent speeches, BoJ Governor Kazuo Ueda and Board members signaled a slow move toward policy normalization. Dovish comments could draw the Japanese government into more intervention threats to bolster the Yen.
A deteriorating labor market environment amidst an uncertain macroeconomic environment could impact consumer spending trends.
Event Alert: US Personal Income and Outlays Report
The heavily anticipated Personal Income and Outlays Report will garner investor interest on Friday. Hotter-than-expected inflation numbers may sink investor bets on an H1 2024 Fed rate cut.
Economists forecast the Core PCE Price Index to increase 2.8% year-on-year in February. The Core PCE Price Index rose by 2.8% year-on-year in March.
While the Core PCE Price Index will be the focal point, personal income and spending also need consideration. Upward trends in personal income and spending numbers could fuel demand-driven inflation. A higher-for-longer Fed rate path may impact borrowing costs and reduce disposable income. Downward trends in disposable income could curb consumer spending.
Economists forecast personal income and spending to increase by 0.4% and 0.5%, respectively. In January, personal income and spending rose by 0.4% and 1.0%, respectively.
Beyond the numbers, Fed Chair Powell will speak at the Macroeconomics and Monetary Policy Conference. Reaction to the Personal Income and Outlays Report warrants investor focus. Before the February numbers, Fed Chair Powell signaled rate cuts will begin this year.
Short-term Forecast
Near-term trends for the USD/JPY will hinge on the Personal Income and Outlays Report. Higher-than-expected inflation, income, and spending trends could cut bets on an H1 2024 Fed rate cut. Fed reaction to the report also warrants investor attention. However, positive figures may have a limited impact on the USD/JPY amidst intervention threats from the Japanese government.
USD/JPY Price Action
Daily Chart
The USD/JPY hovered well above the 50-day and 200-day EMAs, affirming the bullish price signals.
A USD/JPY breakthrough at the 151.685 resistance level would support a move to the 152 handle.
The Japanese government, the BoJ, the US Personal Income and Outlays Report, and Fed Chair Powell need consideration.
Conversely, a USD/JPY drop below the 151 handle could give the bears a run at the 50-day EMA. A break below the 50-day EMA would bring the 148.529 support level into play.
The 14-day RSI at 62.23 suggests a USD/JPY move to the 152 handle before entering overbought territory.
