USD/JPY Eyes CPI and BoJ Signals as Inflation Week Begins
USD/JPY traders brace for inflation signals from Japan. Economists forecast producer prices to rise 3.5% year-on-year (YoY) in May, down from 4% in April.
A weaker-than-expected print may further dampen bets on a 2025 Bank of Japan rate hike, pressuring the Yen and lifting USD/JPY. Conversely, a stronger reading may reignite BoJ rate hike bets, pushing USD/JPY lower.
Producer prices are a leading inflation indicator as producers adjust prices in response to demand. Softer prices may reflect subdued demand, supporting a less hawkish BoJ stance. Conversely, rising prices may signal a more hawkish BoJ rate path.
BoJ Governor Kazuo Ueda has previously signaled support for rate hikes if inflation moves sustainably to the Bank’s 2% target.
Still, trade tensions remain a key driver of USD/JPY alongside inflation expectations.
USD/JPY Daily Outlook: US CPI in the Spotlight
Later in the session, the market focus will turn to the US CPI Report. Economists forecast the annual inflation rate to climb to 2.5% in May, up from 2.3% in April. Underlying inflation is also expected to move further from the Fed’s 2% target, rising from 2.8% to 2.9% in May.
Hotter inflation could sink Fed rate cut bets, possibly driving USD/JPY above 145 and the 50-day Exponential Moving Average (EMA). A sustained move above the 50-day EMA would bring the May 29 high of 146.285 into play. In contrast, softer readings may support a more dovish Fed rate path, sending the pair toward 142.5 and last week’s low of 142.367.
USD/JPY: Key Scenarios to Watch
- Bearish USD/JPY Scenario: Renewed trade tensions, higher Japanese producer prices, hawkish BoJ signals, or softer US inflation could push USD/JPY toward 142.5.
- Bullish USD/JPY Scenario: Easing trade tensions, softer producer prices, dovish BoJ cues, or hotter US inflation may drive the pair above 145 toward 146.285.
See today’s full USD/JPY forecast with chart setups and trade ideas.
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See all AUD/USD forecastsAUD/USD in Focus: US-China Trade Headlines to Guide Risk Sentiment
US-China trade talks continued on June 10, spotlighting AUD/USD. Easing US-China trade tensions and progress toward a meaningful agreement could boost Chinese demand and bolster Aussie dollar sentiment. Given that China accounts for one-third of Australian exports and, with a trade-to-GDP rate exceeding 50%, improving trade terms may ease recession fears.
Conversely, failed talks may raise recession risks and prompt a more dovish RBA rate stance. A more dovish RBA rate path could drag AUD/USD lower.
At the most recent RBA press conference, Governor Michele Bullock warned:
“Australia’s economy could easily be compromised if a trade war between the US and China escalates. Depending on where we end up on trade developments, there might be more interest rate adjustments. But for now, rates are in the right place.”
AUD/USD: Key Scenarios to Watch
- Bearish AUD/USD Scenario: Escalation in the US-China trade war or dovish RBA rhetoric may send AUD/USD below $0.65 toward $0.6450 and the 200-day and 50-day EMAs.
- Bullish AUD/USD Scenario: A US-China trade deal or hawkish RBA cues could drive the pair above $0.6550 toward $0.66.
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Aussie Dollar Daily Outlook: US CPI in Focus
Later today, the US CPI Report will move AUD/USD through its influence on US-Aussie interest rate differentials.
Higher inflation would likely temper Fed rate cut expectations, widening the interest rate differential in favor of the US dollar. A wider rate differential may pull AUD/USD below $0.65, bringing the 200-day and 50-day EMAs into sight.
Softer inflation, by contrast, may revive Fed rate cut bets, narrowing the rate differential. In this scenario, AUD/USD may move above $0.6550, with the $0.66 level as the next key target.
Key Market Drivers to Watch Today:
- USD/JPY: BoJ commentary, Japan producer prices, and trade headlines.
- USD/JPY and AUD/USD: US inflation report and trade developments.
- AUD/USD: RBA policy chatter and Beijing’s stimulus signals.
For more in-depth analysis, review today’s USD/JPY and AUD/USD trading setups in our latest reports and consult our economic calendar.