USD/JPY is trading in the support area between 111.00-50. The price is expected to bounce higher as the impulsive bearish pressure is currently fading slowly.
The US-China trade war and Fed's soft rhetoric on monetary policy suggest that the likelihood of rate cuts by the US central bank could cap USD gains in the medium term. President Donald Trump's top economic adviser disclosed that the trade deal is coming to a close and the US is currently setting the tone in the negotiation. Ahead of CPI report to be published this week, US analysts expect stable inflation, though anticipating higher wages and gas prices. Recently US Average Hourly Earnings report revealed that wage growth is losing momentum. So, the indicator dropped to 0.1% in March from the previous value of 0.4% which was expected to be at 0.3%. Unemployment rate remained unchanged as expected at 3.8%. On the whole, the Non-Farm Employment Change was better than expected with a sharp increase to 196k from the previous minor growth of 33k, much stronger than the forecast for a 172k increase. A solid employment gain in the US private and public sectors on the one hand and an uptick in average hourly eanrings on the other hand signal unstable economic conditions and the labor market.
This week FOMC Meeting Minutes along with Federal Budget Balance report are going to be published on Wednesday. The latter is expected to show a decrease to -194.7B from the previous figure of -234.0B. Another market-moving report is inflation data with a CPI expected to increase to 0.3% from the previous value of 0.2%.
On Thursday, US PPI report is going to be published. The factory inflation is likely to have risen to 0.3% from the previous value of 0.1%. Besides, FOMC Members Clarida and Bullard are going to speak about ongoing and future monetary policy and short-term interest rate decisions. The speeches will make no impact on USD.
Meanwhile, USD is currently quite stronger in comparison to JPY. So, USD is winning favor with investors in the coming days. USD/JPY is likely to trade with higher volatility and price corrections this week. Any positive readings in the pending reports from the US will trigger impulsive bullish pressure in the pair.
