• Toshimitsu Motegi said the BoJ should be clear about rate hikes.

• Economists expect another quarter-point hike from the Bank of Japan.

• US President Joe Biden ended his campaigns for the November presidential election.

The USD/JPY outlook remains bearish as the yen gains ahead of next week’s Bank of Japan and Fed policy meetings. Notably, there is more pressure on the BoJ to hike rates. At the same time, the Fed is nearing its first rate cut in September.

On Monday, senior ruling party official Toshimitsu Motegi said the BoJ should be clear about rate hikes. He also said a weak yen was hurting the economy, so Japan’s central bank should start communicating plans to reduce its massive economic stimulus.

Economists expect the Bank of Japan to hike interest rates another quarter-point. However, a consensus on the timing has yet to emerge. Still, policymakers might announce plans to reduce bond purchases at the next meeting.

Furthermore, investors are optimistic about the looming Fed rate cut, which would reduce the rate gap between Japan and the US. Recent economic reports have led to a surge in expectations for a cut in September, significantly weakening the dollar. The next major report is the core PCE price index, due Friday. If price pressures continue easing, the dollar might weaken further.

Since last week, the yen has been on the front foot after Japan’s government intervened to support the currency. The intervention coincided with the softer-than-expected US CPI report, boosting the yen.

Elsewhere, currency markets remained calm after US President Joe Biden ended his campaigns for the November presidential election. Trump will now compete with Kamala Harris. However, there is still a higher likelihood that Trump will win.

USD/JPY key events today

There will be no key reports from Japan or the US today, so the pair might extend yesterday’s move.

USD/JPY technical outlook: Bears remain in control after SMA retest

On the technical side, the USD/JPY price is descending after revisiting the 30-SMA resistance. Bulls failed to break above the SMA, showing a strong bearish trend. This attempt came after the RSI made a bullish divergence.

Although bears were exhausted, they were not ready to give up control at the 30-SMA. As a result, the price is falling. If it makes a lower low, it might retest the 155.01 level and confirm a continuation of the downtrend. Otherwise, bulls might retest the SMA.

https://www.forexcrunch.com/blog/2024/07/23/usd-jpy-outlook-yen-soars-on-boj-meeting-anticipation/