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Shifting to the US labor market and consumer sentiment, initial jobless claims and the Michigan Consumer Sentiment Index also need consideration.
A spike in jobless claims and a fall in consumer sentiment could indicate weaker wage growth and spending. A pullback in consumer spending may soften demand-driven inflationary pressures. However, another drop in claims and improving sentiment may delay Fed rate cuts.
A more hawkish Fed may push USD/JPY toward 150, while dovish signals could trigger a drop toward 145.
Short-term Forecast:
In the coming week, USD/JPY trends will hinge on:
- Japan’s Economic Data: Wage growth and inflation remain crucial for the BoJ rate path.
- US Reports: Inflation, labor market, and consumer sentiment to affect Fed rate cut bets
- Geopolitical risks: US tariff developments could impact market sentiment.
USD/JPY Price Action
Daily Chart
After last week’s declines, the USD/JPY sits well below the 50-day and the 200-day EMAs, sending bearish price signals.
A USD/JPY break above the 149.358 resistance level would support a return to 150. A breakout from 150 could enable the bulls to target the 200-day and 50-day EMAs.
Conversely, a break below last week’s low of 146.935 could signal a drop toward 145. A fall through 145 would bring the 140.309 support level into sight.
The 14-day Relative Strength Index (RSI) at 33.86 indicates a USD/JPY fall below 147 before entering oversold territory (RSI below 30).
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