However, a weakening labor market backdrop could impact consumer spending trends more. Consumers tighten the purse strings in a deteriorating labor market environment, dampening demand-driven inflation.

The USD/JPY could be more sensitive to the report, with official US inflation numbers out on Tuesday. Significantly, softer inflation trends would boost expectations of an H1 2024 Fed rate cut.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on US inflation numbers and wage negotiations in Japan. Softer US inflation and a hike in Japanese pay could tilt monetary policy divergence toward the Yen. The Fed is eyeing an H1 2024 rate cut. In contrast, wage hikes could raise bets on the BoJ exiting negative rates in March.

USD/JPY Price Action

Daily Chart

The USD/JPY remained below the 50-day EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

A USD/JPY move through the 148.405 resistance level and 50-day EMA would bring the 150.201 resistance level into play. Selling pressure could intensify at the 148.405 resistance level. The 50-day EMA (148.412) is confluent with the resistance level.

Wage negotiations, BoJ chatter, and US consumer inflation expectations need consideration.

However, a break below the 146.649 support level would give the bears a run at the 200-day EMA (145.465).

The 14-day RSI at 35.08 suggests a USD/JPY drop below the 146.649 support level before entering oversold territory.