Tighter labor market conditions crashed investor expectations of a 50-basis point November Fed rate cut. FOMC Members’ support for a 50-basis point November rate cut could send the USD/JPY toward 147.5. Conversely, if members call for a delay to Fed rate cuts, the USD/JPY could approach 150.

A delay in Fed rate cuts may lower expectations of a narrowing in the interest rate differential between the US and Japan.

Short-term Forecast for USD/JPY

USD/JPY trends will likely hinge on crucial economic indicators from Japan, including household spending (Tues) and wage growth trends (Tues). Upward trends in wages and household spending could fuel demand-driven inflation, boosting bets on a Q4 2024 BoJ rate hike.

However, FOMC member commentary and Thursday’s US CPI Report will likely influence the Fed rate path. A softer-than-expected US inflation rate may retrigger bets on aggressive Fed rate cuts. Conversely, a hotter-than-expected CPI print could reduce bets on multiple 2024 Fed rate cuts, possibly pushing the USD/JPY through 150.

Traders should stay vigilant as monetary policy chatter and Japan’s economic data could affect 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 holds above the 50-day EMA while remaining below the 200-day EMA, confirming bullish near-term but bearish longer-term price trends.

A USD/JPY break above the 200-day EMA would support a return to 150. Furthermore, a breakout from 150 could give the bulls a run at the trend line and the 151.685 resistance level.

Japan’s LEI Index trends and monetary policy commentary require consideration.

Conversely, a break below the 148.529 support level could bring the 50-day EMA and the 145.891 support level into play.

The 14-day RSI at 65.41 suggests a USD/JPY climb to the 200-day EMA before entering overbought territory.