USD/JPY bulls running out of steam on the bid, focus on a 38.2% Fib retracement

• USD/JPY bulls run into resistance and the hourly retracement is underway. 
• It is a big week or two on the calendar for the pair.

At 131.88, USD/JPY is higher towards the close on Wall Street by some 0.8%. The pair has rallied from a low of 130.42 to score a high of 132.01. There are no Japanese data scheduled for release on Monday nor has there been anything key in the way of data for the US at the start of the week. Nonetheless, there is a busy schedule ahead for the pair.

Japanese inflation data will be released on Friday while the Bank of Japan meets on June 16-17 and is expected to maintain its ultra-low interest rate regime to boost growth further. Meanwhile, the markets are digesting the May employment report that had been released on June 3 and will now look to the release of the May Consumer Price Index on June 10 ahead of the Federal Reserve later in the month.

The employment data were mixed, with a solid gain in payrolls, a steady Unemployment Rate near pre-COVID lows, but a smaller increase in hourly earnings. Overall, the Federal Open Market Committee is unlikely to be veered away from an expected 50-basis point rate increase at their meeting on June 15-16.

Additionally, while the release of the consumer price index on Friday is unlikely to switch the direction of the board member's thinking, it could still have an impact on the market as investors try to second guess the Fed's trajectory down the line for the future path of rate increases.

In other data this week, international trade for April will be released on Tuesday, while Wholesale Inventories for May on Wednesday followed by Initial Jobless claims on Thursday will be important as will the Preliminary Michigan Sentiment index for June on Friday.

We are in a blackout period ahead of the Fed, so there will be no Federal Reserve officials speaking. 

USD/JPY technical analysis