Yen. Image Source: Pixabay
 

• The USD/JPY forecast shows an increasing likelihood that the BoJ will delay rate hikes to next year.
• Talks between China and the US ended, easing trade war fears.
• Traders are paying close attention to the upcoming US CPI report.

The USD/JPY forecast shows an increasing likelihood that the Bank of Japan will delay rate hikes to next year. Meanwhile, talks between the US and China ended with few details. At the same time, market participants are awaiting the US CPI report for clues on the future of Fed rate cuts. 

A Reuters poll on Wednesday revealed that a slim majority of economists believe the BoJ will hike in Q1. According to them, the impacts of Trump’s tariffs will force policymakers to delay hikes. Meanwhile, top officials at the bank have reiterated that they will continue to hike rates when inflation and growth re-accelerate. 

Elsewhere, talks between China and the US ended, easing trade war fears. However, there were few details on the outcome of the talks. Still, just the fact that they met and discussed trade was enough to show progress in negotiations. 

Meanwhile, traders are paying close attention to the upcoming US CPI report. The data might show a 0.2% increase in price pressures in May. Meanwhile, the annual figure might increase from the previous 2.3% to 2.5%. If inflation is hot, it will confirm fears that Trump’s tariffs have hiked price pressures. Such an outcome would mean more delays on Fed rate cuts.

USD/JPY key events today

• US core CPI m/m
• US CPI m/m
• US CPI y/y

USD/JPY technical forecast: Broken trendline yells for more gains

(Click on image to enlarge)

USD/JPY 4-hour chart

On the technical side, the USD/JPY price has broken above a solid resistance trendline, a sign that bulls might be ready to take charge. The price trades above the 30-SMA, with the RSI over 50, showing bulls are in the lead. However, they are facing a solid hurdle at the 145.00 key level. 

For some time, the price has been making lower highs. However, it has failed to make lower lows as the 142.55 held firm as support. If bears cannot make lower lows, bulls will likely get stronger and start making higher highs and lows. 

A break above the 145.00 key resistance level will clear the path for USD/JPY to retest the 147.00 key level. On the other hand, if the level holds firm, the price will likely drop back below the trendline to retest the 142.55 support. 

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