USDJPY rebounds ahead of US PCE and BoJ policy meeting

• USDJPY rebounds from 12-week low
   
• US PCE data today might lead to Fed rate cuts
   
• Markets imply 89.3% chance of rate cut in Sept
   
• BoJ may potentially hike interest rates
   
• RSI at 30.56 hints potential USDJPY technical rebound

The USDJPY continues to rebound after hitting a 12-week low of 151.942 in yesterday's (July 25th) trading session.

The markets are now preparing for important economic data from both Japan and the United States.
 

Today's PCE reading may potentially further increase the possibility for the Fed to start cutting interest rates as early as September.

At the time of writing, markets were pricing in an 89.3% chance of a September rate cut (source: CME FedWatch Tool).

This could lead to a weaker USD, pushing the USDJPY further down towards the 200-period SMA.

As for Japan, investors are looking forward to the industrial production and retail sales figures to be published next week.
 

More importantly, the BoJ's policy meeting (July 31) will be in the spotlight, as markets may see a long-awaited rate hike.

A continuous rise in Tokyo's core CPI rate has contributed to the likelihood of further policy normalization.

The BoJ is also expected to announce the details of its quantitative tightening plan.

According to Bloomberg, the USDJPY is expected to trade (with 72.7% probability) within a range of 150.94 - 157.20 during the next 7 days.

From a technical perspective…

USD/JPY is trading at 154.107, below the 21-SMA (158.5990), 50-SMA (157.9528), and 100-SMA (155.5023), but above the 200-SMA (151.6494), indicating short to medium-term bearish pressure.

The RSI is at 30.56, close to oversold territory, suggesting potential for a technical rebound.

The long-term trend could remain cautiously optimistic as long as the price stays above the 200-SMA.