USD/JPY Signals for coming week

 

USD/JPY  Signals for coming week

 

USD/JPY is currently in a consolidation phase with mixed signals. Technical indicators show some bearish momentum as it closed below the 50-day moving average, but strong demand near support levels suggests potential for a rebound if it breaks above key resistance around 149.12. Overall, expect sideways to slightly bearish movement with possible volatility depending on U.S. rate signals and market sentiment.

 

Fundamental Factors

 

The Japanese Yen is under pressure due to a positive global risk sentiment and domestic political uncertainty, which typically weakens safe-haven currencies like JPY.

However, strong wage growth in Japan (4.1% YoY nominal wages in July) and positive real wage growth support the case for the Bank of Japan to continue its policy normalization, which is bullish for JPY.

Inflation in Japan remains above the BoJ’s 2% target, reinforcing expectations of an interest rate hike by year-end, which would strengthen JPY.

The recent US tariff reduction on Japanese automobiles reduces trade uncertainty, potentially supporting JPY.

The US Dollar is facing downward pressure amid expectations of Federal Reserve rate cuts later this year, which weighs on USD/JPY.

Technical Analysis

 

USD/JPY is trading near key support and resistance levels, with resistance around 148.5 to 149.0 and support near 146.9 to 147.0.

The pair is currently in a sideways range, with oscillators and moving averages showing a neutral to slightly bearish bias.

Chart patterns such as a descending triangle suggest a potential breakdown if support at 146.96 is breached.

Some traders anticipate a bearish reversal near the 148.1 to 148.5 resistance zone, while others see potential for a bounce from Fibonacci retracement support levels around 142.4 to 144.9.

Market Sentiment and Upcoming Events

 

Market participants are awaiting the US Nonfarm Payrolls (NFP) report, which will be a key driver for USD/JPY in the near term.

A stronger-than-expected NFP could support the USD and push USD/JPY higher, while a weaker report would likely accelerate the pair’s decline.

The overall risk tone and geopolitical developments will also influence the pair’s direction.

Summary and Outlook

 

The path of least resistance for USD/JPY appears to be to the downside in the coming days, supported by expectations of Fed rate cuts and BoJ policy normalization.

Key support to watch: 146.96 – a break below could trigger further declines.

Key resistance to watch: 148.5 to 149.0 – failure to break above this zone may reinforce bearish momentum.

Expect volatility around the US NFP release, which could cause sharp moves in either direction depending on the data.

 

Traders should monitor wage and inflation data from Japan, US economic releases, and central bank communications closely.

Risk management is crucial given the potential for sharp moves around key technical levels and economic events.

A cautious approach with attention to both fundamental and technical signals is advised for trading USD/JPY in the coming days.

 

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