- Neel Kashkari stated that the Fed probably needs to do more work to manage inflation.
- Fed Chairman Jerome Powell will deliver speeches on Wednesday and Thursday.
- Japan’s real wages declined for the 18th consecutive month.
The USD/JPY outlook brightened with investors embracing a bullish sentiment Tuesday as the dollar extended its rally, building on Monday’s upswing. On Monday, Neel Kashkari, the President of the Fed Bank of Minneapolis, stated that the US central bank probably needs to do more work to manage inflation. Consequently, the dollar rose.
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Additionally, Fed Chairman Jerome Powell will deliver speeches on Wednesday and Thursday. Markets will focus on whether he maintains the more dovish stance adopted after the Fed’s policy meeting last week.
CBA’s Kong noted, “If Powell takes a slightly more hawkish approach later this week, the dollar could bounce back.”
Meanwhile, the Japanese yen moved above the critical 150 level. This level has kept traders anxious in recent weeks as they watch for signs of intervention from Tokyo.
Notably, the yen reached 151.74 per dollar last week, coming closer to the lows observed in October 2022. The decline prompted multiple rounds of dollar-selling interventions. Elsewhere, Japan’s real wages declined for the 18th consecutive month in September, and consumer spending continued its slump. Increasing prices squeezed households’ purchasing power. As such, it increased pressure from labor groups for higher wage increases.
Global financial markets closely monitor wage trends in the world’s third-largest economy. Moreover, the Bank of Japan considers sustainable wage increases a prerequisite for phasing out its ultra-loose monetary policy.
USD/JPY key events today
Investors are not expecting any major economic reports from Japan or the US. Consequently, the pair might not make big moves today.
USD/JPY technical outlook: Price reclaims 150.00 threshold.
On the charts, USD/JPY has recovered yet again and is trading above the 150.00 key level. There is solid bullish momentum, as seen in the RSI, which has pushed above 50. However, the rebound has paused at the 30-SMA resistance.
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Notably, bears failed to get the price to the 149.00 support level. As such, the price made a higher low. It shows that bulls might be in control on a larger scale. Moreover, this indicates that bulls might push the price to make a higher high. If this is the case, the price will likely soon break above the 30-SMA and the 150.75 resistance level.
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