USD/JPY rounds cycle highs in a low-volume session

• USD/JPY is trading stable at the 141.80 area after reaching its highest point since November 2022.
• The US Stock and Bond Markets are closed for the June 19 celebrations.
• The focus is on US economic data and Chairman Powell’s testimony on Wednesday.

USD/JPY eased back slightly to the 141.80 zone on Monday after hitting multi-month highs on Friday. US traders are celebrating June 1st and the markets are relatively quiet. Investors appear to be consolidating gains after the USD/JPY pair rallied over 100 points on Friday. This week’s focus remains on US economic data due to be released over the next few sessions, President Powell’s testimony before the US Congress and Bank of Japan (BoJ) minutes. ) which will be published on Tuesday.

Economic data to start to shape July Fed decision, eyes on BOJ Minutes

Last Wednesday, Jerome Powell declared that the Federal Reserve (Fed) opted for a pause in the hike, and that officials needed additional information to assess its implications for monetary policy. In that sense, US housing data to be released on Tuesday, followed by jobless claims and S&P PMIs on Thursday and Friday, respectively, may influence your expectations ahead of the next July meeting. Also, Chairman Powell’s testimony before Congress on Wednesday may trigger some reaction in USD price dynamics.

At the moment, according to CME’s FedWatch tool, investors are betting on a 75% chance that the Fed will raise interest rates 25 basis points (bps) to the 5.25%-5.50% range on July 26.

On the other hand, on Tuesday the Bank of Japan will publish the minutes of its meeting on Friday, where investors will have a better perspective of the entity’s stance regarding monetary policy that could potentially affect the yen.

USD/JPY levels to watch

The USD/JPY pair is in a short-term bullish trend, according to the daily chart. The Relative Strength Index (RSI) and Moving Average Divergence (MACD) are in positive territory, with the pair trading above its main moving averages, indicating that buyers are in charge.

If the USD/JPY manages to advance, the next resistances to watch are at the 142.00 zone, followed by the 142.50 zone and the 143.00 zone. On the other hand, the 141.50 area is the immediate support level for USD/JPY. A break below this level could pave the way to the 20-day SMA at the 139.90 area and then to the 139.20 area.