We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • French EU Minister says we are seeking a Brexit deal, but not at any price $GBP
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.28% 🇯🇵JPY: 0.02% 🇨🇦CAD: 0.01% 🇦🇺AUD: -0.08% 🇨🇭CHF: -0.11% 🇳🇿NZD: -0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/UeNcsKGpIo
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: France 40: 0.65% Germany 30: 0.62% US 500: 0.51% Wall Street: 0.48% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/cEoH2bm0oY
  • The #Euro technical outlook against the US Dollar may be on the verge of turning bullish as $EURUSD attempts to reverse the prevailing downtrend that has held since June. Get your market update from: https://t.co/kZ0dJUd4Jq https://t.co/eGvGRnx9N0
  • EU's Barnier says it is still possible to reach a Brexit deal this week - negotiations are currently intense. Sterling on a roll - - GBPUSD +0.60% @ 1.26800. #gbpusd #brexit #sterling @DailyFX
  • What is the status of the $USD as the world's reserve currency, and where is #Brexit heading? Find out from @IG_US CEO Rupert Osborne, only on Trading Global Markets Decoded #podcast episode here: https://t.co/wnEQUhB0v9 https://t.co/gtKf1wxlbM
  • (Analyst Pick) Australian Dollar Forecast Versus Yen, AUD/JPY Declines to Resume? $AUDJPY #AUD #JPY - https://www.dailyfx.com/forex/analyst_picks/todays_picks/daniel_dubrovsky/2019/10/15/Australian-Dollar-Forecast-Versus-Yen-AUDJPY-Declines-to-Resume.html?CHID=9&QPID=917702 https://t.co/wxpMKdZSxP
  • Japan Industrial Production (YoY) (AUG F): Actual: -4.7% Previous: -4.7% And Tertiary Industry Index (MoM) (AUG) Actual: 0.4% Previous: 0.1% $USDJPY
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.92%, while traders in France 40 are at opposite extremes with 83.41%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/wpiVMUxSmj
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.07% 🇨🇭CHF: 0.06% 🇬🇧GBP: 0.06% 🇪🇺EUR: 0.05% 🇯🇵JPY: 0.04% 🇦🇺AUD: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/4I9J8GjX73
USD/JPY Outlook Mired by Lackluster Non-Farm Payrolls (NFP) Report

USD/JPY Outlook Mired by Lackluster Non-Farm Payrolls (NFP) Report

2018-08-03 19:35:00
David Song, Currency Strategist
Share:

USD/JPY Outlook Mired by Lackluster Non-Farm Payrolls (NFP) Report

Fundamental Forecast for Japanese Yen: Bullish

Japanese Yen Talking Points:

USD/JPY pares the advance from late-July as the below-forecast U.S. Non-Farm Payrolls (NFP) report dampens the outlook for growth and inflation, and data prints scheduled for the first full-week of August may continue to drag on the exchange rate as attention turns to the updates for the Consumer Price Index (CPI).

Even though the headline reading is expected to increase 3.0% per annum in July, which would mark the fastest pace of growth since 2011, the core rate of inflation is anticipated to hold steady at 2.3% for the second consecutive month. The CPI figures may add to the bag of mixed data prints as the NFP report disappoints, and another set of lackluster developments may keep USD/JPY under pressure as it rattles bets for four Fed rate-hikes in 2018.

Keep in mind, recent comments from the Federal Open Market Committee (FOMC) suggest the central bank has no intentions of deviating from its hiking-cycle as the ‘Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term.

Fed Fund Futures reflect expectations of four rate-hikes in 2018.

Despite the threat of a trade war with China, it seems as though the FOMC will adopt a less-accommodative stance over the coming months as the U.S. economy nearly sits at full-employment while inflation holds around the 2% target, and Fed Fund Futures may continue to reflect expectations for four rate-hikes in 2018 as Chairman Jerome Powell & Co. hawkish forward-guidance for monetary policy.

With that said, the incoming batch of U.S. data prints may keep USD/JPY under pressure if the fresh figures instill a weakened outlook for the economy, and easing bets for four Fed rate-hikes may fuel a broader shift in USD/JPY behavior as both price and the Relative Strength Index (RSI) snap the bullish trends from earlier this year.

USD/JPY Daily Chart

USD/JPY is showing a lack of momentum to push above 112.40, raising the risk for a downward move.

Even though the Bank of Japan (BoJ) sticks to its Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control, failure to preserve the recent string of higher highs & lows may produce range-bound conditions, with the lack of momentum to push above the 112.40 (61.8% retracement) to 112.80 (38.2% expansion) raising the risk for a move back towards the July-low (110.28), with the next downside region of interest coming in around 108.30 (61.8% retracement) to 108.40 (100% expansion), which sits just above the May-low (108.11).

For more in-depth analysis, check out the Q3 Forecast for Japanese Yen

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.