Last week the USD/JPY witnessed a significant drop, where areas of 85.50 limited the upside wave for the pair and powered the yen. Comments from U.S. monetary policy makers signaled that the Feds might delay hiking interest rates, which supported the Japanese currency alongside prevailing haven demand on uncertainty.
Fed Chairman Ben S. Bernanke said last week the acceleration of inflation will be temporary, as the increase in commodity prices is expected to slow.
Some Fed policy makers indicated that rising inflation rate is transitory, which could prevent them from hiking interest rates following ECB. This fact could give the Japanese currency more momentum against the greenback.
The new quake hit Japan last week fueled fears regarding the Japanese nuclear crisis, as risk averse dominated the markets pushing investors to buy low yielding currencies.
The U.S. economy will issue NAHB housing market index for April at 14:00 GMT, and is expected to come at 17 the same as previous reading. The Japanese economy is not going to issue any news on Monday, which could drive the pair to move in a volatility manner.
Originally posted here
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