Several upcoming agendas could serve as stronger catalysts for the US dollar and major pairs compared to yesterday's PMI data release.

USD/JPY News

The US dollar lost ground against several major currencies in yesterday's trading session as robust Eurozone and UK PMI data outperformed expectations, contrasting with weaker figures from the United States. Nevertheless, USD/JPY maintained its upward trajectory, nearing the crucial 155.00 level, while the US Dollar Index (DXY) regained strength during Wednesday's Asian session. Ahead, several upcoming events may drive further movements in the US dollar and major currency pairs.

S&P Global's preliminary survey results for April 2024 revealed surprising PMI figures, indicating a slowdown in US business activity across both the service and manufacturing sectors. The US Composite PMI dropped from 52.1 to 50.9 due to decreased demand.

In contrast, business activity in the Eurozone and the UK showed sustained recovery, particularly in the dominant service sectors. The Eurozone Composite PMI rose from 50.3 to 51.4, while the UK PMI increased from 52.8 to 54.0.

Despite these data, interest rate expectations remained largely unaffected. Market sentiment suggests a high probability of the Fed initiating interest rate cuts in September and the ECB in June. Early speculations on rate cuts in the UK vary between June and August.

All eyes are now on the release of the Personal Consumption Expenditures (PCE) report on Friday, a crucial indicator for Federal Reserve policy decisions, particularly the Core PCE Price Index, which serves as a key gauge of US inflation.

Kyle Rodda, senior financial markets analyst at Capital.com, commented, "The story remains that the U.S. economy is pretty resilient, and as long as we've got the U.S. economy in this position - with even the possibility of more Fed rate hikes - the risks for the U.S. dollar are still skewed to the upside,".

Market participants are eagerly awaiting the Bank of Japan (BoJ) policy meeting on Friday. While most experts expect no policy changes, there's speculation about the BoJ's forward guidance.

According to a Reuters survey, many experts predict the BoJ will raise interest rates later this year, although not at the upcoming meeting. Some hope the BoJ will indicate its readiness to raise rates if necessary.

Yen traders remain cautious, fearing potential currency interventions by Japanese authorities. Finance Minister Shunichi Suzuki highlighted last week's meetings with the US and South Korea, indicating Tokyo's preparedness to act against excessive movements in the yen.