Japanese Yen and Aussie Dollar News: Will USD/JPY Break 150? Services PMIs in Focus

Japan Services PMI Spotlights the USD/JPY and Bank of Japan

On Monday, March 24, private sector PMIs will influence USD/JPY trends and the Bank of Japan’s policy stance. Economists forecast the Jibun Bank Services PMI to fall from 53.7 in February to 52.9 in March. Meanwhile, economists expect the Jibun Bank Manufacturing PMI to rise from 49.0 to 49.2 in March.

The Services PMI will be the key figure, given the BoJ’s reliance on services inflation to fuel underlying inflationary pressures. Potential USD/JPY scenarios include:

• Bearish Yen case: Weaker services sector activity, softer input and output prices, and a slower job creation rate could temper bets on a July BoJ rate hike. In this scenario, the USD/JPY could climb above 150.
• Bullish Yen case: An upswing in services sector activity, rising input and output prices, and a pickup in job creation could boost July BoJ rate hike odds. The USD/JPY could drop toward 147 on a more hawkish BoJ policy outlook.

BoJ Policy Outlook: Expert Insights

On Yen strength and the potential influence of the spring wage negotiations on inflation, Natixis Asia Pacific Chief Economist Alicia Garcia Herrero commented:

“While the stronger Yen is alleviating cost push inflation, the economic outlook is deteriorating with increasing uncertainty on US policies. Furthermore, the expected incremental wage increase at the spring negotiation is unlikely to be regarded as additional evidence of strengthening virtuous circle between nominal wages and inflation yet.”

The BoJ’s Summary of Opinions on March 28 will shed further light on policymakers’ views regarding wages, inflation, and the potential effects of US tariff policy.

A Reuters poll conducted from March 4–11 showed that 18 of 61 economists expect a 25-basis point hike in Q2 2025, while 40 of 57 predict a Q3 move, with 26 of 37 expecting a hike in July. The chances of a July rate hike have risen from 59% in February to 70% in March.

USD/JPY Trends: US Services Sector in Focus

Later in the US session, the S&P Global Services PMI will influence the Fed rate path and US dollar demand. Economists predict the Services PMI will increase from 51.0 in February to 51.2 in March.

Given the services sector contributes around 80% to the US GDP, a pickup in services sector activity, rising employment, and prices could drive US dollar demand. The USD/JPY pair may climb above the crucial 150 threshold on a less dovish Fed rate path.

Conversely, a sharp PMI drop below 50 may renew US recession fears, signaling a more dovish Fed policy outlook. In this scenario, the USD/JPY may fall toward the March 11 low of 146.537.

Explore expert forecasts and trade setups for USD/JPY in our latest market analysis here.

Aussie Dollar Under the Influence of PMI Data

Turning to AUD/USD, private sector PMIs influenced Aussie dollar demand and sentiment toward the RBA rate path. The all-important Judo Bank Services PMI rose to 51.2 in March, up from 50.8 in February.

With services accounting for around 75% of Australian GDP, an upswing in service sector activity may temper RBA rate cut bets. March data showed faster services inflation and job creation. A tighter labor market could lift wages, fueling consumption and inflation, which may support a less dovish RBA stance.

The AUD/USD responded positively, rising from $0.62629 to $0.62865.

For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.

Australian Dollar Daily Outlook: Services Sector Drives Rate Differentials

In the US session, the S&P Global Services PMI could affect the US-Aussie interest rate differential.

A higher Services PMI reading could signal a more hawkish Fed rate path, widening the interest rate differential in favor of the US dollar. A wider rate differential could drag the AUD/USD pair toward $0.62.

However, an unexpected slide in the Services PMI could narrow the rate differential, potentially driving the AUD/USD pair toward $0.63.

Beyond the data, President Trump’s tariff policies need consideration. Rising tariffs could weigh on global trade and risk sentiment, negatively impacting commodity currencies such as the Aussie dollar.

Key Market Trends: Central Bank Policies and Trade Developments

Current drivers for the forex market include:

• USD/JPY: BoJ forward guidance following inflation data and wage negotiations.
• USD/JPY and AUD/USD: Services PMI trends and US tariff policy shifts.
• AUD/USD: China stimulus and US-China trade tensions.

Read our expert analysis on USD/JPY and AUD/USD forecasts here for deeper insights.