U.S. Dollar were sidelined on trading ahead of a key report on producer price inflation and testimony by Federal Reserve Chairman Jerome Powell. Yesterday, Senate Democrats approved a $3.5 trillion investment plan, the U.S. announced plans for a new infrastructure investment. Senate Majority Leader Chuck Schumer said President Joe Biden’s drive was a boost and should be included in the budget resolution to be discussed soon. Schumer said the $ 3.5 trillion deal, which is yet to be approved by the 50-member Senate Democratic Alliance, includes a significant expansion of the Medicare program for the elderly – a key goal of budget committee chair Bernie Sanders.

Later in the session, investors will also have the opportunity to respond to an assessment of the latest Fed Beige book on economic conditions. Fed Powell will speak with Congress on Wednesdays and Thursdays on the update on monetary policy. Part of his job is to sell the central bank’s easier policies in the wake of a strong economy and increase inflation. Powell has vowed that the current position will remain the same until “significant progress” is made towards the central bank’s employment and inflation targets.

U.S. for June On the same day that inflation data showed warmer than expected, the USD/JPY strengthened, raising expectations that inflation worries would continue. U.S. Costs of travel-related services continued to rise in June as supply barriers and the pace of economic recovery accelerated over 13 years in June.

Business confidence of Japanese manufacturers rose for more than two and a half years in July as the country’s export-driven recovery recovered thanks to solid global demand, according to a Reuters Tongan poll. But in a worrying sign, as companies struggled with the fall of the corona virus crisis, the service sector sentiment is pessimistic that, according to the poll, the Bank of Japan (BOJ) is closely monitoring the Tankan quarterly survey.

Traders are now looking forward to Fed Jerome Powell testifying before Congress on Wednesday and Thursday for any signals of highest interest rates. Powell has repeatedly said that high inflation will be temporary, and that he expects the supply chains to normalize and change.

USD/JPY 4 Hour Chart:

Support: 110.33 (S1), 110.03 (S2), 109.88 (S3).

Resistance: 110.78 (R1), 110.93 (R2), 111.23 (R3).

Amidst this Japan business confidence survey and key report of U.S. producer inflation shows the sidelined trend. We expect mid trend for USD/JPY.