USD/JPY outlook: Ueda speech, U.S. data in focus as yen bias turns neutral

• Disconnect from rate spreads unlikely to last
• U.S. PMIs, labor data, core PCE in focus
• Ueda speech key for BOJ hike bets
• Neutral bias favoured entering December

Summary

USD/JPY has defied traditional drivers like rate differentials and risk appetite in recent weeks, but history suggests it’s a matter of when—not if—those relationships return. With month-end flows out of the way, attention turns to a heavy calendar: U.S. PMIs, labor indicators, and core PCE on one side, and Ueda’s speech, household spending, and JGB auctions on the other. Add in a technical backdrop that’s softened from overbought conditions, and the stage is set for volatility as December begins.

Assessing U.S. Event Risk

Even though USD/JPY has not shown a meaningful relationship with traditional drivers such as rate differentials, risk appetite, or volatility measures recently, history suggests that disconnect will not last for long, especially with the calendar turn removing factors like month-end window dressing. That puts continued emphasis on factors that could impact those drivers, including known risk events on the calendar.

Source: TradingView (U.S. Eastern Time)

On the U.S. side, manufacturing and services PMIs released Monday and Wednesday look particularly important, as does the next swathe of labor market indicators such as Challenger layoffs and jobless claims on Thursday, given continued concern from Fed officials about downside risks for the economy and labor market. Incomes and consumption data out Friday will also receive plenty of attention, along with the core PCE deflator, the Fed’s preferred underlying inflation measure. These figures may be delayed for September, but recent patterns suggest delayed data can still spark volatility.

Source: TradingView

As things stand, traders are pricing around 88 basis points of cuts from the Fed through the end of 2026, with any meaningful shift in that total likely to influence the performance of the U.S. dollar. While it doesn’t show up in correlation analysis against USD/JPY, the latest pullback in the U.S. dollar index corresponds with a slight uptick in dovish pricing.

While Jerome Powell and Michelle Bowman are scheduled to speak during the week, the nature of their appearances does not point to discussion regarding the monetary policy outlook, meaning it will likely be left to the data to influence rate pricing over the coming days.

Ueda Speech Eyed

Source: TradingView (U.S. Eastern Time)

Turning to Japan, the calendar is arguably even more important for USD/JPY direction, with a key speech from BOJ Governor Ueda on Monday, household spending data out Friday, and 10 and 30-year Japanese government bond (JGB) auctions slotted in between.

Source: Bloomberg

Following a hotter-than-expected Tokyo inflation print last Friday, traders see the risk of a 25-basis-point hike from the BOJ in December as more probable than not, so Ueda’s speech looms as particularly important should he choose to endorse or push back against that pricing.

Source: TradingView

With JGB yields failing to retrace much of the gains seen in early November over the past week, demand signals from the latest round of debt auctions will be closely scrutinised, especially as there has been a relatively strong relationship between longer-dated Japanese yields and USD/JPY until the past few days, hinting that unease over Japan’s fiscal outlook has been a major influence behind the yen’s recent weakness.

USD/JPY neutral bias favoured

Source: TradingView

From a technical standpoint, USD/JPY looks heavy on the charts, trading through the October uptrend on Friday with indicators such as RSI (14) and MACD rolling over from overbought conditions, signaling waning upside strength. While the latest pullback resembles a bull flag pattern, pointing to the risk of an eventual resumption of the bullish trend, the overall assessment favors a neutral bias as we enter December.

Levels on the downside to watch include 155.73, 155.00, 153.68, and 153.00. Above, 157.90 and 158.88 may provide resistance.