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  • Investors will scrutinize Powell’s speech for any signs of hawkishness.
  • The likelihood of a 75bps hike has increased over the past few weeks to 37%.
  • US consumer confidence fell to a four-month low in November.

Today’s USD/JPY price analysis is bearish. The yen strengthened against the dollar ahead of a speech from Jerome Powell, the chairman of the Federal Reserve. Powell’s remarks will be scrutinized for any additional indications of hawkishness, with important jobs figures for November scheduled to be released on Friday.

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When it meets on December 13–14, the US central bank is anticipated to raise interest rates by 50 basis points. However, the likelihood of a 75-basis-point increase has increased over the past few weeks and is now 37%.

The US interest rate policy strongly influences the dollar/yen exchange rate moves. The Japanese yen has gained as investors have reduced expectations for more aggressive US rate hikes.

According to data released on Tuesday, households in the United States were less willing to spend on expensive things over the next six months due to high inflation and rising borrowing prices. Hence consumer confidence fell to a four-month low in November.

USD/JPY key events today

Investors will see the state of the US labor market when the ADP nonfarm payrolls and the JOLTs’ job openings reports are released. There will also be a GDP report showing the US economy’s health.

Finally, investors will pay close attention to a speech from Fed chair Jerome Powell. This speech will likely contain clues on the future of monetary policy.

USD/JPY technical price analysis: RSI showing weakness

USD/JPY price analysis

Looking at the 4-hour chart, we see the price trading slightly below the 30-SMA and the RSI below 50. The price is trading at a pivotal area, with bulls looking to break above the SMA and bears looking to bounce lower. The bearish trend found strong support at the 138.03 level.

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There were many attempts to break below 138.03 that failed. The RSI made a bullish divergence pattern with the price, showing weakness in the bearish trend.

For this divergence to play out, bulls need to break above the 30-SMA and start making higher highs and higher lows. If that happens, the price will take out resistance at 140.019 and head for the 142.00 key level.

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