USD/JPY initially declined but strengthened following the U.S. core PCE aligning with expectations, with technical indicators suggesting a potential bullish rebound ahead. Support levels are holding steady, and the pair is likely to consolidate as it anticipates the forthcoming FOMC decision and press conference. The US dollar experienced a slight decline against the Japanese yen during early trading on Friday. However, we have now responded to the core PC figures that were released as expected in the United States, and consequently, this situation leads to a slight strengthening of the US dollar, as there were expectations of unfavorable developments among some market participants.
Currently, it is essential to monitor Japanese yields in the bond markets and the JGB market, as increasing interest rates may indicate an underlying issue. While it may signal the end of the carry trade, I believe it won’t spiral out of control, and currently, we are in the midst of developing another hammer pattern similar to the one observed on Thursday. A bounce here appears to be justifiable from a technical analysis perspective, potentially driving the market back to the 158 level. The 50-day EMA is positioned around the 153.50 area, while the 153 yen mark below serves as a crucial support level, assuming all factors remain constant, and this market appears poised to uncover ongoing buying opportunities grounded in value.
Additionally, the upcoming Wednesday session will present the interest rate decision, which is likely to attract significant attention from observers. However, I believe that the primary focus will be on the press conference and the accompanying statement, and if the Federal Reserve appears to be cautious about making swift cuts, this should lead to an appreciation of the US dollar. In the upcoming days, it appears that the focus will be on remaining in this vicinity, effectively utilizing the time while awaiting that crucial information. Currently, we remain in an upward trend, and that remains the same as it appears that we are attempting to move higher.
I find it appealing as the market continues to consolidate while still showing a bullish bias overall, with technical structures supporting the likelihood of upward continuation as long as support levels remain intact. The developing hammer patterns indicate persistent buying interest, and the broader sentiment suggests traders are positioning ahead of key macro events. With the FOMC decision expected to provide clarity on policy direction, USD/JPY is poised for potential volatility, yet the prevailing trajectory continues to favor buyers unless a significant shift occurs.