Japanese Yen Forecast: Will USD/JPY Break 147.5? BoJ Dovish Tone and US Jobs Report Key

On Friday, October 4, commentary from the Bank of Japan and the Japanese government regarding monetary policy will influence the USD/JPY pair.

Recent economic data has curbed investor bets on a Q4 2024 BoJ rate hike. Tokyo’s annual inflation rate, excluding food and energy, was 1.2% in September, well below the BoJ’s 2% target rate. Meanwhile, the Jibun Bank Services PMI declined from 53.7 in August to 53.1 in September, further reducing the likelihood of a rate hike.

Bank of Japan Governor Kazuo Ueda recently highlighted the importance of the Services PMI data, stating,

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

Bank of Japan and Japan’s New Prime Minister Sink Rate Hike Bets

Alongside the economic data, the government and the BoJ have tempered expectations for a Q4 2024 rate hike.

On Wednesday, Japan’s new prime minister, Shigeru Ishiba, surprised the markets, saying that the country is not ready for further rate hikes. Prime Minister Ishiba made the comments after meeting with BoJ Governor Kazuo Ueda.

BoJ board members echoed similar sentiment. On Thursday, BoJ Board Member Noguchi reportedly said,

“I personally feel we need to proceed very carefully in adjusting our degree of monetary support.”

Similar comments from other BoJ board members and government officials may further impact buyer demand for the Yen. Dovish comments could push the USD/JPY toward 147.5.

US Jobs Report Under the Spotlight

Later in the Friday session, investors will focus on the all-important US Jobs Report.

Economists predict nonfarm payrolls will increase by 140k in September after a 142k rise in August. Additionally, economists expect the unemployment rate to hold steady at 4.2%.

Upbeat US labor market data could dampen Fed rate cut bets, possibly pushing the USD/JPY toward 147.5. Conversely, weak data could refuel expectations of aggressive Fed rate cuts, driving the USD/JPY below 145.

Short-term Forecast for USD/JPY

USD/JPY trends will likely hinge on BoJ monetary policy chatter and the US Jobs Report. Dovish signals from the BoJ and the Japanese government could weigh on Yen demand. Moreover, upbeat US labor market data could dampen expectations of a marked narrowing in the interest rate differential between the US and Japan. The shift in sentiment may drive the USD/JPY toward 147.5.

Traders should stay vigilant as Friday’s data and monetary policy chatter 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 remains above the 50-day EMA while hovering below the 200-day EMA, affirming bullish near-term but bearish longer-term price signals.

A USD/JPY break above 147.5 could signal a move toward the 148.529 resistance level. Furthermore, a breakout from the 148.529 resistance level may give the bulls a run at the 200-day EMA.

Monetary policy commentary and the US Jobs Report require consideration.

Conversely, a drop below the 50-day EMA and the 145.891 support level could signal a fall toward the 143.495 support level.

The 14-day RSI at 59.46 indicates a USD/JPY move to the 200-day EMA before entering overbought territory.