Japanese Yen Forecast: Key Influences on USD/JPY
Tokyo Inflation's Impact on USD/JPY
This Friday, key inflation figures from Tokyo will shape buyer demand for the USD/JPY currency pair.
Economists predict Tokyo’s annual inflation rate, excluding food and energy, to ease from 1.6% to 1.4%. If inflation doesn't meet expectations, investor sentiment regarding a possible Bank of Japan (BoJ) rate hike in Q4 2024 could wane.
Expert Insights on the BoJ Rate Prospects
BoJ Governor Kazuo Ueda has suggested caution when interpreting data, especially since the national inflation rates rose slightly to 3.0% in August. If Tokyo's figures weaken, expectations concerning a rate hike in Japan might diminish, potentially allowing the USD/JPY pair to breach the 145 mark.
US Economic Indicators Under Observation
Later on the same day, the US Personal Income and Outlays Report will come under scrutiny. Economists expect an uptick in the Core PCE Price Index to 2.7% year-on-year in August.
- Higher-than-expected inflation might suppress predictions for a Federal Reserve rate cut in November.
- Conversely, disappointing personal income data could tilt bets back towards a 50-basis point rate cut.
USD/JPY Technical Analysis and Short-term Forecast
Market trends for USD/JPY will rely heavily on upcoming inflation reports and central bank commentary. Should Tokyo's inflation surprise to the upside, the USD/JPY could quickly test bearish resistance levels.
- If USD/JPY breaks 145, watch for a further challenge at 145.891.
- A decline below 143.495 may lead traders to target 142.5.
Traders must analyze real-time economic indicators and adapt strategies accordingly to channel prevailing market sentiment in this pivotal week.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.