USD/JPY Price Analysis: Greenback Recovers Ahead of FOMC

• Investors are speculating ahead of key speeches by Fed and Bank of Japan policymakers.

• Markets imply a more than 70% chance of a September Fed rate cut of 25 bps.

• A Reuters poll on Wednesday showed most economists expect the BoJ to raise interest rates again this year.

USD/JPY price analysis is slightly bullish as the greenback recovers ahead of the FOMC policy meeting minutes. At the same time, investors are speculating ahead of crucial speeches by policymakers at the Fed and the Bank of Japan.

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The US dollar fell earlier in the week as traders fully priced in a Fed rate cut at its September meeting. However, consumer inflation rose moderately in July, reducing bets for a 50 bps rate cut. However, there is more than a 70% chance for a reduction of less than 25 bps.

Traders are on edge, waiting to see if policymakers will support this outlook. The FOMC minutes will show how officials decided to hold rates at the last meeting and their confidence levels in inflation progress.

Experts believe that the market is very favorable. Therefore, any sign that policy makers are less accommodative could benefit the dollar. Powell will speak at the Jackson Hole symposium on Friday. Investors will be listening carefully for indications of the size and pace of future interest rate cuts. If it sounds cautious or less dovish than expectations, it could trigger a rally in the dollar.

Meanwhile, Bank of Japan Governor Kazuo Ueda will also speak on Friday. Markets will wait to see if it signals another rate hike and supports the yen. A Reuters poll on Wednesday showed most economists expect the Bank of Japan to raise interest rates again this year.

Key USD/JPY Events Today

USD/JPY Technical Analysis: Bears struggle to break away from 0.382 Fib resistance

Technically, USD/JPY is recovering after making a new low. However, the bearish trend remains intact, with price below the 30-SMA and RSI below 50. The bears recently broke below the 0.382 Fib level.

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The price is now trying to break away from this level, but it continues to pull back. If the bears regain momentum, USD/JPY is likely to break down to the 142.56 support level. On the other hand, if the bulls take control with a break above the 30-SMA, the price could rise to the 150.03 resistance level.

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