**Title: US Dollar Awaits Key Inflation Data, Yen Weakens, and Central Banks Remain in Focus**
*By Mitrade News Team. Original reporting at Mitrade.com.*
### Introduction
The foreign exchange market is bracing for a week filled with high-impact events, especially from the United States, where traders await crucial Consumer Price Index (CPI) data. With persistent concerns about inflation and its impact on central bank policy, the US dollar’s price action will be dictating global currency trends. Meanwhile, the Japanese yen continues to struggle as the Bank of Japan reignites intervention speculation. In Europe, the euro and British pound remain steady, although economic uncertainties persist. This article explores how these major currencies are shaping up as key economic data and central bank signals loom.
—
### US Dollar: Poised for Volatility Ahead of Inflation Data
The US dollar has maintained a steady upward trend in recent weeks as the Federal Reserve continues its hawkish stance amid sticky inflation. The upcoming CPI data is expected to be the week’s most significant event, potentially setting the tone for the greenback’s direction for the rest of the month.
– **CPI Data Release:** The core personal consumption expenditures (PCE) index and CPI remain the Fed’s preferred inflation gauges. Any deviation from expectations will not only sway rate hike bets but could set off dramatic movements in the dollar index (DXY).
– **Fed’s Rate Hike Path:** The current market consensus suggests a pause in rate hikes, but a stronger-than-expected CPI print could rekindle bets of another hike before year-end.
– **US Treasury Yields:** Rising yields, especially at the shorter end of the curve, have bolstered the dollar as global investors continue flocking to the perceived safety of US assets.
– **Geopolitical Risk:** Safe-haven flows due to ongoing global tensions further underpin dollar demand.
#### Technical Picture
On the charts, the DXY remains above its 200-day moving average, signaling bullish momentum. Resistance is seen near the 105.30 level, while support resides around 104.60. A break above resistance following strong inflation data could open the path toward 106.00.
—
### Japanese Yen: Intervention Speculation Returns
The Japanese yen has weakened against the dollar after BOJ officials sent mixed signals about their intentions to exit ultra-accommodative monetary policy. Markets are abuzz with speculation over possible intervention by Japanese authorities as USD/JPY surges above the psychologically important 150 level.
– **BOJ Policy Outlook:** Despite increased inflationary pressures, the Bank of Japan continues to lag behind other major central banks in normalizing policy, capping yen strength.
– **Verbal Intervention:** Japanese officials, including Finance Minister Shunichi Suzuki, have ramped up rhetoric, warning of readiness to act against excessive currency moves.
– **Intervention Thresholds:** Markets are closely watching the 152-153 levels, historically seen as potential triggers for direct yen-buying actions by the Japanese government.
– **US-Japan Rate Differential:** The main driver of yen weakness remains the wide yield differential with the US, making carry trades with the dollar particularly attractive.
#### Technical Picture
The USD/JPY pair shows strong bullish momentum. Resistance exists at 152.00, with a breach possibly inviting actual intervention. Support can be found near 148.50.
—
### Euro: Struggles Amid Economic Uncertainty
The euro’s recent moves have been largely range-bound as investors weigh eurozone growth risks against central bank tightening. With mixed economic data from Germany and France, the European Central Bank (ECB) faces a policy dilemma.
– **Inflation Trends:** While eurozone headline inflation has moderated, core inflation remains uncomfortably high for ECB policymakers.
– **ECB Rate Path:** Investors expect a hold at the next ECB meeting, but lingering hawkish guidance leaves room for another hike later this year if inflation surprises on the upside.
– **Economic Growth Concerns:**
Read more on GBP/USD trading.