USDJPY is testing the upper line of the recent uptrend channel after the Fed signaled that 2 more rate hikes could be in play later this year. Fed members provided a more hawkish dot plot yesterday. Despite Powell’s more neutral press conference, the dollar index might face more upward pressure if the incoming data doesn’t show much slowing down.
Now that the FOMC meeting is over, yen traders have turned their attention towards the Bank of Japan. BOJ Governor Ueda has repeatedly signaled that the ultra-loose monetary policy will continue for the time being. Despite the latest positive GDP surprise, Japan’s GDP is still below pre-pandemic levels. Additionally, inflation numbers have started to show signs of a slowdown, and wage growth remains low. All in all, the BOJ is likely to continue with its current policy, at least for now.
USDJPY is currently testing the upper line of the uptrend channel that started in January. The levels to watch this week are 141.500 and the Fibonacci 61.8% level at 142.500, both of which are important resistance levels. A breakout could lead the price to 146.116 in the coming days. However, if USDJPY fails to break above the upper line, the current support to watch is 137.50, which was a key resistance level since 2022 but was recently broken in May.
