• The US will release consumer inflation data on Wednesday.

• Economists expect the CPI to increase by 0.2%.

• Bank of Japan policy meeting minutes revealed uncertainty about the next hike.

The USD/JPY forecast brightened on Monday as the dollar rose ahead of crucial US inflation data during the week. Meanwhile, the yen weakened after Bank of Japan policy meeting minutes revealed uncertainty about the timing of the next rate hike.

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The US will release consumer inflation data on Wednesday and wholesale inflation data on Thursday. These reports will significantly shape the outlook for future Fed rate cuts. Economists expect the CPI to increase by 0.2%, holding steady from the previous month.

A bigger-than-expected increase would lower the likelihood of a Fed rate cut in December. On the other hand, if inflation aligns with expectations or is softer, the US central bank will likely cut rates again in December. Meanwhile, market participants will also watch the retail sales report on Friday for clues on consumer spending.

Markets expect the Fed to cut rates again in December. However, since Trump won the presidential elections, bets for rate cuts in 2025 have dropped. Traders are pricing the likelihood that Trump’s policies will lead to an increase in inflation. Therefore, the Fed might be forced to cut rates at a slower pace or to pause and pivot.

Meanwhile, the yen eased on Monday after BoJ meeting minutes revealed that policymakers were unsure about the timing of the next rate hike. Nevertheless, the currency rose last week when Trump won, and top officials warned markets about sharp yen declines. A Trump presidency means that the greenback will likely rally. Therefore, the yen might suffer, prompting the Bank of Japan to hike rates.

USD/JPY key events today

Market participants do not expect any high-impact reports today. Therefore, they will keep digesting the BoJ minutes.

USD/JPY technical forecast: Bulls struggle to breach the 153.75 resistance

On the technical side, the USD/JPY price is climbing and challenging the 153.75 resistance level. At the same time, on a larger scale, it is trading in a bullish channel with clear support and resistance lines. Bears recently pushed the price to around the channel support, where bulls took charge.

Currently, the price trades above the 30-SMA, with the RSI in bullish territory. Therefore, the solid bullish bias will likely lead to a break above 153.75. This will allow USD/JPY to reach the 155.00 critical psychological level.

https://www.forexcrunch.com/blog/2024/11/11/usd-jpy-forecast-markets-brace-for-key-us-inflation-data/