USD/JPY is expected to move next week on US economic data and expectations of a BOJ rate hike. Some analysts believe upward pressure on the yen could persist even after the August jobs report came in above expectations.
USD/JPY fell below the previous week’s 154.00–158.00 yen range this week, briefly declining to 152.89 yen. Despite the August US jobs report significantly exceeding market expectations, the pair’s recovery was limited, while expectations of an additional BOJ rate hike and the unwinding of yen carry trades accelerated yen appreciation.
Next week, the focus is expected to be on whether the FOMC can put a floor under the dollar and whether yen-buying catalysts will be exhausted at the BOJ meeting. Several factors could affect the yen, including elevated US long-term interest rates, fiscal developments and a review of GPIF’s investment management in connection with the cabinet reshuffle.
Expectations of rate hikes by the BOJ and the Federal Reserve are affecting market pricing. Depending on the market’s reaction, the pace of further BOJ rate hikes could become a factor supporting continued yen appreciation. The yen’s movement is expected to vary depending on market expectations, including the outlook for rate hikes from December onward.
Technically, USD/JPY has continued to trade above its moving averages on a daily basis, while downside is expected to extend to around 152.50 yen. A break below 152 yen could open the way to further downside. Key resistance levels ahead include around 155.75 yen and 156.50–156.65 yen.