Japanese Yen Forecast: USD/JPY Faces Pressure as US Inflation Data Looms

The Bank of Japan Takes Center Stage

On Wednesday, September 11, the Bank of Japan may influence the USD/JPY pair, affecting sentiment toward the BoJ rate path.

BoJ Board Member Junko Nakagawa is on the economic calendar to speak. Insights into the Bank of Japan’s interest rate plans require consideration. Support for a Q4 2024 BoJ rate hike could push the USD/JPY lower, possibly toward 141.500.

Bank of Japan Bets Increase Following Forward Guidance

On Thursday, September 5, Bank of Japan Board Member Hajime Takata reportedly warned about hiking interest rates too soon. Despite concerns about the timing, Takata supported further rate hikes if the economy and price trends align with expectations.

Expert Views on the Bank of Japan Rate Path

Unlimited Funds Chief Investment Officer Bob Elliot recently offered his views on the Bank of Japan’s policy goals, stating,

“Japan doesn’t have an inflation problem. There is still little urgency for the BoJ to do much based on macro conditions regardless of rhetoric, making the Fed the main driver of JPY for the foreseeable future, not the BoJ.”

US Economic Calendar: Eyes on Inflation Data

Later in the session on Wednesday, the US CPI Report will take center stage. Economists forecast the annual inflation rate to ease from 2.9% in July to 2.6% in August. A lower-than-expected inflation figure may reignite investor expectations for a 50-basis point September Fed rate cut.

A more dovish Fed rate path would narrow the interest rate differential between the US and Japan as the BoJ eyes further rate hikes, possibly pushing the USD/JPY down toward 141.500.

Expert Views on the US Labor and the Fed Rate Path

AMP Head of Investment Strategy and Chief Economist Shane Oliver remarked on the US Jobs Report, stating,

“US Aug payrolls +142k,

Short-term Forecast: Bearish

USD/JPY trends will hinge on the upcoming inflation figures from the US and comments from the BoJ. A combination of hawkish comments from the BoJ and weaker US inflation could narrow the interest rate differential between the US and Japan, signaling a drop below 141.5.

Investors should remain alert with inflation data and central bank chatter likely to influence the BoJ and the Fed’s rate paths. Monitor real-time data, central bank insights, and expert commentary to adjust your trading strategies accordingly. Stay updated with our latest news and analysis to manage USD/JPY volatility.

USD/JPY Price Action

Daily Chart

The USD/JPY remained well below the 50-day and 200-day EMAs, confirming bearish price trends.

A USD/JPY breakout from 142.500 could signal a move toward the 143.495 resistance level. Furthermore, a break above the 143.495 resistance level may bring the 145.891 resistance level into play.

Central bank commentary and the US CPI Report require consideration.

Conversely, a break below 142 could indicate a drop toward the 141.032 support level.

The 14-day RSI at 34.54 indicates a USD/JPY drop below 142 before entering oversold territory.