US Dollar Forecast: USD/JPY Bounces Back Ahead of June Low
USD/JPY may stage a larger recovery over the coming days as it appears to be defending the rebound from the June low (142.38).
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US Dollar Outlook: USD/JPY
USD/JPY rises to a fresh weekly high (145.24) as the US Non-Farm Payrolls (NFP) report shows a 147K expansion in June versus forecasts for a 110K print, and the exchange rate may stage a larger recovery over the coming days as it appears to be defending the rebound from the June low (142.38).
US Dollar Forecast: USD/JPY Bounces Back Ahead of June Low
USD/JPY extends the rebound from the monthly low (142.68) as the NFP report continues to reflect a strong labor market, and little signs of a looming recession may encourage the Federal Reserve to keep US interest rates higher for longer especially as the Unemployment Rate unexpectedly narrows to 4.1% from 4.2% during the same period.
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In response, the Federal Open Market Committee (FOMC) may keep US interest rates on hold as Chairman Jerome Powell warns that ‘that ‘increases in tariffs this year are likely to push up prices and weigh on economic activity,’ and the central bank may stick to a wait-and-see approach over the coming months amid the ongoing transition in US trade policy.
With that said, USD/JPY may appreciate ahead of the next FOMC rate decision on July 30 as it bounces back ahead of the June low (142.38), but the exchange rate may continue to trade within the May range as both the Fed and Bank of Japan (BoJ) seem to be in no rush to adjust monetary policy.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY bounces back ahead of the June low (142.38) to register a fresh weekly high (145.24), and a move/close above 145.90 (50% Fibonacci extension) may push the exchange rate toward 147.10 (38.2% Fibonacci retracement).
- Next area of interest comes in around the June high (148.03), but the recent rebound in USD/JPY may turn out to be temporary as it still trades within the May range.
- Lack of momentum to hold above the 144.40 (23.6% Fibonacci retracement) to 144.60 (50% Fibonacci extension) region may push USD/JPY back toward the weekly low (142.68), and failure to defend the June low (142.38) may lead to a test of the May low (142.12).
Additional Market Outlooks
USD/CHF Rebound Struggles to Pull RSI Out of Oversold Zone
EUR/USD Pulls Back While RSI Holds in Overbought Zone
Australian Dollar Forecast: AUD/USD Eyes November High
British Pound Forecast: GBP/USD Coils Ahead of July
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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