- The USD/JPY exchange rate rose for the fifth consecutive week ahead of several important economic data releases from the United States and the upcoming interest rate decision from the Bank of Japan.
- According to the trading, it rose to the resistance level of 153.85, its highest level since July, and is about 10% higher than its low in September.
Upcoming U.S. Economic Data
The USD/JPY pair will interact with several important economic data releases from the United States, which will provide more information about the upcoming actions by the Federal Reserve. The first data will be released on Tuesday when the Conference Bureau publishes its latest consumer confidence report. Analysts expect the data to show confidence rising to 99 in October as inflation declines and the Labor market improves. US consumer confidence is one of the most important economic figures because of its implications for the economy. Highly confident consumers spend more money, which boosts the economy, which is notable because consumer spending is the largest part of the US GDP.
Other important data will be released on Wednesday when ADP releases its October payrolls data. Analysts expect the figure to come in at 101,000, a significant drop from the 143,000 jobs it posted last year. After that, the US will release its first estimate of third-quarter gross domestic product. Economists expect the figure to show the economy expanded by 3% last quarter, meaning it is doing relatively well.
The most important data will be the US nonfarm payrolls data for October, due on Friday. Economists polled by Reuters expect the data to show the US economy added 111,000 jobs this month, a significant drop from the 254,000 jobs it added in September. The country’s unemployment rate is expected to come in at 4.1%, while average hourly earnings are expected to rise by 4.0%. The figures will be important because of their impact on the Federal Reserve, which is considering what to do at its Nov. 7 meeting. Analysts expect the bank to leave interest rates unchanged or cut them by 25 basis points.
Crude Oil Price Decline
The USD/JPY pair also rose as crude oil prices dropped by over 4.5% on Monday. Brent, the global benchmark, fell by 4.35%, while West Texas Intermediate (WTI) declined by 4.36%. The decline followed Israel’s response, which focused on Iran’s missile manufacturing facilities and avoided major attacks on its oil infrastructure and nuclear sites. Iran, in turn, signalled that it would not respond aggressively due to its already struggling economy. Analysts believe that with these tensions easing, oil supplies are unlikely to face significant disruptions.
Upcoming U.S. Election
Another major event for USD/JPY is the upcoming U.S. election next week. Recent polling data shows Donald Trump holding an advantage over Kamala Harris. For instance, his lead on Polymarket has expanded in recent months. A Trump victory is expected to be favourable for the U.S. dollar due to his focus on tariffs. Higher tariffs could lead to heightened geopolitical tensions and rising inflation in the U.S.
Bank of Japan Interest Rate Decision
According to the economic calendar, the other big news for USD/JPY currency pair will be the Bank of Japan’s interest rate decision on Thursday. Furthermore, analysts expect the bank to leave rates unchanged at 0.25%. The bank’s governor, Kazuo Ueda, also hinted at this during a meeting in Washington last week. The BoJ will then deliver its economic outlook report and a press conference where it will offer hints on what to expect later this year. The latest data showed that core inflation in Tokyo moved below the BoJ’s 2.0% target. As such, there are signs that the unwinding of the yen trade will not continue.
USD/JPY Technical analysis and Expectations Today:
The daily chart shows that the USD/JPY exchange rate has been doing well in the past few months. It has risen from a low of 140 in September to around 154, its highest level since July 30. The pair has moved above the 50-day and 100-day exponential moving averages (EMA), which are about to witness a bullish crossover.
Oscillators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are all pointing up. Therefore, the path of least resistance will be at 154.52, the low recorded on June 4. A move above this level will indicate further gains.
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