Japanese Yen Forecast: USD/JPY Poised for Moves as Jibun Bank Services PMI Nears

Jibun Bank Services PMI and the Bank of Japan Outlook

Japan’s finalized Jibun Bank Services PMI will spotlight the USD/JPY and the Bank of Japan. According to the preliminary survey, the Services PMI increased slightly from 53.7 in August to 53.9 in September.

An upward revision to the Services PMI could fuel speculation about a possible Q4 2024 BoJ rate hike. The services sector accounts for over 70% of the Japanese economy. In particular, the BoJ will likely focus on employment and price trends, giving the subcomponents greater weighting.

Last week, Bank of Japan Governor Kazuo Ueda highlighted the importance of the upcoming services sector data, stating,

“October is a month when service price revisions are concentrated in Japan, so we must scrutinize data carefully.”

A higher Service PMI could signal a narrowing in the interest rate differential between the US and Japan, possibly sending the USD/JPY below 145.

Expert Views on the Bank of Japan Rate Path

Bloomberg reporter Erica Yokoyama commented on Tuesday’s Tankan figures from Japan, stating,

“Confidence among Japan’s large manufacturers held steady from three months ago, keeping the Bank of Japan on track to consider a rate hike late this year or early next.”

US Services and Labor Market Data Spotlight the Fed

Later in the Thursday session, US initial jobless claims and the ISM Services PMI will influence US dollar demand.

Economists expect initial jobless claims to increase from 218k (week ending September 21) to 220k (week ending September 28). An unexpected decline may reduce expectations of aggressive Fed rate cuts, possibly pushing the USD/JPY toward 147.5. However, a modest increase would shift the investor focus to the ISM Services PMI.

Economists predict the ISM Services PMI will increase from 51.5 in August to 51.6 in September. A larger-than-expected increase would signal a robust US economy as the services sector accounts for nearly 80% of GDP. Conversely, a drop below 50 could reignite fears of a hard US landing, possibly pushing the USD/JPY below 145.

Short-term Forecast for USD/JPY

USD/JPY trends will likely hinge on the Services PMI from Japan and the US. Upbeat figures from Japan and a weaker ISM Services PMI could fuel expectations of monetary policy divergence favoring the Yen. This combination may send the USD/JPY below 145.

Traders should stay vigilant as this week’s data will impact trading USD/JPY strategies. Monitor real-time data, central bank views, and expert commentary to adjust your trading strategies accordingly. Stay ahead of the market with our expert insights.

USD/JPY Technical Analysis

Daily Chart

The USD/JPY hovers above the 50-day EMA while remaining below the 200-day EMA, sending bullish near-term but bearish longer-term price signals.

A USD/JPY return to 147.5 could bring the 148.529 resistance level into play. Furthermore, a break above the 148.529 resistance level may signal a move toward the 200-day EMA.

The US and Japan’s Services PMIs and central bank commentary require consideration.

Conversely, a break below the 50-day EMA and the 145.891 support level could give the bears a run at the 143.495 support level.

The 14-day RSI at 58.20 suggests a USD/JPY climb to the 200-day EMA before entering overbought territory.