US Dollar Forecast: USD/JPY Vulnerable on Failure to Test August High
USD/JPY may struggle to retain the advance from earlier this month should it fail to test the August high (150.89).
Share this:
US Dollar Outlook: USD/JPY
USD/JPY pulls back from a fresh monthly high (149.98) despite signs of a growing dissent within the Federal Reserve, and lack of momentum to test the August high (150.89) may keep the Relative Strength Index (RSI) out of overbought territory.
US Dollar Forecast: USD/JPY Vulnerable on Failure to Test August High
The recent advance in USD/JPY appears to be stalling ahead of the US Retail Sales report as it no longer carves a series of higher highs and lows, and the RSI may show the bullish momentum abating should it continue to hold below 70.
US Economic Calendar
It remains to be seen if the Retail Sales report will influence USD/JPY as household consumption is expected to increase 0.3% in September, but signs of a stronger-than-expected economy may sway the Federal Open Market Committee (FOMC) as Governor Christopher Waller emphasizes that ‘we have seen upward revisions to GDI (Gross Domestic Income), an increase in job vacancies, high GDP growth forecasts, a strong jobs report and a hotter than expected CPI (Consumer Price Index) report.’
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
In turn, Governor Waller acknowledged that ‘this data is signaling that the economy may not be slowing as much as desired’ while speaking at Stanford University, with the official going onto say that ‘monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting.’
With that said, waning speculation for another 50bp rate cut may keep USD/JPY afloat ahead of the next Fed rate decision on November 7, but the exchange rate may struggle to retain the advance from earlier this month should it fail to test the August high (150.89).
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Strategist; USD/JPY on TradingView
- USD/JPY may struggle to retain the advance from earlier this month if it fails to break/close above the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) region, with a move below the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) zone bringing the monthly low (142.97) on the radar.
- Next area of interest comes in around 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) but a break/close above the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) region may push USD/JPY towards the August high (150.89).
- A move back above the 2022 high (151.95) opens up 153.80 (23.6% Fibonacci retracement), with the next area of interest coming in around 156.50 (78.6% Fibonacci extension).
Additional Market Outlooks
USD/CAD Rally Eyes August High as RSI Pushes into Overbought Zone
British Pound Forecast: GBP/USD Susceptible to Test of September Low
EUR/USD Outlook Hinges on ECB Interest Rate Decision
Gold Price Forecast: Bullion Breaks Out of Bull Flag Formation
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD weekly outlook: FOMC and ECB to set the tone
The current backdrop is modestly bearish. On Friday, the EUR/USD closed modestly lower, down for the third consecutive day. The pair also posted a weekly decline after staging a modest recovery attempt in the previous week. Out of the past 8 weeks, the EUR/USD has fallen on 6 occasions. There is not much supporting factors for the single currency right now. So, the upside remains capped.
USD/JPY Weekly Outlook: AI earnings could overshadow the Fed and BoJ
AI sentiment has become a major driver of US Treasury yields and USD/JPY. With Microsoft, Alphabet and Amazon reporting this week, central bank decisions may have competition for traders' attention.
USD/JPY Forecast: Is Rising Japanese Inflation Supporting the Yen?
As the trading week comes to an end, one of the most relevant developments in the FX market has been the renewed strength of the Japanese yen. This can be seen in the recent performance of USD/JPY, which has fallen nearly 1.0% over the last two trading sessions, highlighting a meaningful recovery in the Japanese currency against the U.S. dollar.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.