Today, at 01:30, Japanese news was published. Following the release of the weak data on consumer price indices in Japan, the Yen declined in the pair with the USD. National consumer price index (CPI) in Japan declined in April by 0.3% on annual basis, consumer price index (CPI) in the region of Tokyo in May fell by 0.5% in annual terms. (GMT+2) .

Although the Yen fell, Japanese stock market showed slight rise. At the beginning of European session the pair USD/JPY has returned to the opening level of the trading day at the level of 109.70. Investors take profit on long positions with the USD after yesterday’s ambiguous US macro-economic data and prior to the speech by Janet Yellen in Harvard University, which is scheduled for 19:15 (GMT+2) today. Market participants expect that Janet Yellen will clarify the position of the Fed on further interest rate increase.

The USD has grown by 2.8% in May after some indications given by the Fed executives, that the Central Bank of the USA may raise interest rate at the meeting in June. According to CME Group, futures for the interest rates demonstrated 4% probability of the interest rate in June. Yesterday, a chance of the rate hike was evaluated at 26% versus 34% a day before yesterday.

Mrs Yellen’s position in terms of the interest rate is very reserved. If her speech will not indicate possibility of the increase in the interest rate, USD may weaken in the currency market. In this case, investors will wait for the data on the US labor market for May, which will be released next week. In case of weak NFPR, the USD may fall in the market.

Another speech by Janet Yellen is scheduled for June 6.

If after all these three important events the rise in the USD continues, the USD/JPY can break through the resistance zone near the levels 110.20 and 110.80 and continue to grow to the levels 112.00 and 113.65. Yesterday, Prime Minister of Japan, Shinzo Abe gave negative comments about the state of the global economy, and warned about the risk of economic crisis, indicating that economic incentives policy is Japan can be continued in order to prevent the rise in the JPY.

USD/JPY: in anticipation of Janet’ Yellen’s speech.  Fundamental analysis as of 27/05/2016

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