This week, Bank of Japan Deputy Governor Ryozo Himino raised concerns about the Yen, saying,

“Exchange-rate fluctuations affect economic activity in various ways. It also affects inflation in a broad-based and sustained way, beyond the direct impact on import prices.”

Comments from Deputy Governor Himino and board member Nakamura highlighted diverging focal points within the BoJ.

US Economic Calendar: The US Jobs Report in Focus

Later in the Friday session, the all-important US Jobs Report will warrant investor attention.

Economists forecast average hourly earnings to rise 3.9% year-on-year in May after an increase of 3.9% in April. Additionally, economists predict nonfarm payrolls to increase by 185k after rising by 175k in April. With economists expecting the unemployment rate to remain steady at 3.9%, weaker-than-expected numbers could fuel investor bets on a September Fed rate hike.

A deterioration in labor market conditions may affect wage growth and reduce disposable income. A fall in disposable income could force consumers to curb spending on non-essential items. Downward trends in consumer spending may dampen demand-driven inflation and enable the Fed to cut interest rates.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on the US Jobs Report. A deterioration in US labor market conditions could raise investor bets on multiple 2024 Fed rate cuts and impact buyer demand for the USD/JPY. Investor expectations of multiple 2024 Fed rate cuts could bring sub-150 into play.

USD/JPY Price Action

Daily Chart

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

A USD/JPY breakout from the 156.500 level would support a move toward the 158 level. Furthermore, a USD/JPY break above the 158 level could give the bulls a run at the April 29 high of 160.209.

Investors should monitor Bank of Japan commentary and consider the US Jobs Report.

Conversely, a USD/JPY break below the 50-day EMA into play could signal a fall toward the 151.685 support level.

The 14-day RSI at 49.23 indicates a USD/JPY fall to the 151.685 support level before entering oversold territory.