USD/JPY Forecast: BoJ Governor Ueda and Fed Chair Powell to Shape Near-Term Trends

Highlights

• The USD/JPY gained 0.44% on Wednesday, ending the session at 150.972.
• Fed uncertainty continued to fuel USD/JPY gains amid hawkish FOMC member chatter.
• On Thursday, Bank of Japan Governor Kazuo Ueda and Fed Chair Jerome Powell will be in the spotlight.

Wednesday Overview of USD/JPY Movements

The USD/JPY gained 0.44% on Wednesday. Following a 0.16% rise on Tuesday, the USD/JPY ended the session at 150.972. The USD/JPY fell to a low of 150.298 before rising to a Wednesday high of 151.057.

Yen Intervention and the Bank of Japan in the Spotlight

On Thursday, the Bank of Japan Governor Kazuo Ueda will speak late in the Asian market session. The Bank’s ultra-loose monetary policy stance amid lackluster wage growth and demand remains the focal point.

The Bank of Japan Governor spoke on Wednesday, setting the stage for a possible pivot from ultra-loose. The Governor reportedly said,

“[…] In terms of how long we maintain our massive monetary easing… real wages don’t necessarily have to turn positive before that decision is made. The decision could be made If we can foresee with some uncertainty that real wages will turn positive ahead.”

The Bank of Japan Governor had previously spoken about the need for wage growth and demand before exiting ultra-loose.

A more detailed outline of policy goals will influence the investor appetite for the Yen. Intervention warnings to bolster the Yen may resurface with the USD/JPY returning to 151. There are no economic indicators from Japan to influence the USD/JPY trends.

Fed Chair Jerome Powell and the US Labor Market in the Spotlight

On Thursday, the US labor market will be in focus again. Tight labor market conditions support wage growth and disposable income.

An upward trend in disposable income could fuel private consumption and demand-driven inflation. A more hawkish Fed rate path would raise borrowing costs, affecting disposable income and consumption. Softer consumption would ease demand-driven inflationary pressures.

Economists forecast initial jobless claims to increase from 217k to 218k in the week ending November 4. An unexpected spike in claims could further erase bets on a Fed rate hike.

Beyond the numbers, Fed commentary warrants consideration. Fed Chair Powell will speak, with FOMC non-voting members Raphael Bostic and Thomas Barkin also delivering speeches. Fed Chair Powell will be the focal point.

Recent Unit labor costs and the US Jobs Report raised bets on the Fed ending its rate hike cycle. References to the US labor market, inflation, and the interest rate path need considering.

Short-term Forecast

Central bank speeches will continue to dictate near-term trends for the USD/JPY. Bank of Japan plans to pivot from an ultra-loose policy, and a dovish Fed could support a gradual move toward 145.

USD/JPY Price Action

Daily Chart

The USD/JPY remained above the 50-day and 200-day EMAs, reaffirming bullish price signals. A USD/JPY move to 151 would give the bulls a run at the 151.889 resistance level.

Bank of Japan Governor Ueda and Fed Chair Powell will be the focal points on Thursday.

A fall through the 150.201 support level would bring the 50-day EMA and the 148.405 support level into play.

The 14-day RSI at 57.86 indicates a USD/JPY move to the 151.889 resistance level before entering overbought territory.

4-Hourly Chart

The USD/JPY remains above the 50-day and 200-day EMAs, affirming bullish price signals.

A USD/JPY breakout from the Wednesday high of 151.057 would support a move to the 151.889 resistance level.

However, a fall through the 50-day EMA and 150.201 support level would bring the 200-day EMA into play.

The 14-period 4-hourly RSI at 62.40 suggests a USD/JPY move to the 151.889 resistance level before entering overbought territory.