The U.S. dollar (USD) is rising moderately as positive U.S. economic reports provide strong reasons to raise interest rates. Traders are waiting for signals from Federal Reserve (Fed) Chairman Jerome Powell on further monetary policy strategy.
U.S. consumer confidence rose in June thanks to a strong labor market. In May new home sales exceeded forecasts. This created expectations that the Fed would continue to hike interest rates in order to bring inflation down to the 2% target.
According to the CME FedWatch tool, investors estimate a 77% chance of a rate hike in July. As a result, the nation's lending rate will rise to a peak of 5.5%.
Fed Chair Powell speaks today at a panel discussion of the European Central Bank Forum in Sintra at 13:30 GMT.
The Japanese government is still under pressure from a strong decline in the yen (JPY). The reason behind that is the Bank of Japan keeping interest rates very low, while other central banks are tightening their monetary policies to curb inflation.
Last September and October Japan took measures to support the yen and prevent it from falling. At that time the USDJPY reached 151.94. This was the highest value in 32 years.
While the currency pair is still well below that high, many market participants see the 145 level as the catalyst for further currency intervention.
Japan retail sales data will be released today at 23:50 GMT. Sales are expected to rise by 5.4%. If this forecast is confirmed, the JPY will strengthen in the short term.
The USDJPY currency pair is maintaining an uptrend.
On the H1 timeframe Relative Strength Index (standard values) shows a divergence. This indicates a decrease in the pair's exchange rate, at least till the trend's support is reached. The uptrend is strong, so it is worth buying now.
Short-term prospects for USDJPY suggest buying at the level of 143,45.
The target is at the level of 145,00.
Part of the profit should be taken near the level of 144,15.
A stop-loss could be placed near the level of 142,80.
The bullish trend is short-term, so trade volume should not exceed 2% of your balance.