The Non-Farm Payrolls (NFP) report for May revealed a significant increase in job growth, surpassing expectations. This unexpected growth led traders to reduce their expectations for a rate cut, resulting in a rally for the US dollar. Economists are predicting that the Consumer Price Index (CPI) will remain steady at 3.4%.
The USD/JPY weekly forecast indicates a bullish trend due to the resilience of the US labor market, which is casting doubt on the possibility of Fed rate cuts. The recent economic data favored the dollar, causing the yen to be influenced by the dollar’s performance. The US added 272,000 jobs in May, exceeding the anticipated 182,000 jobs, leading to a decrease in rate cut expectations and a dollar rally.
Looking ahead to next week, there will be several high-impact economic events from both the US and Japan, likely resulting in increased volatility. The US will release inflation data that will shape the Fed’s rate-cut outlook, with economists expecting the CPI to remain at 3.4%. The outcome of these reports will influence the likelihood of a rate cut in September.
The Bank of Japan will also hold a policy meeting, expected to maintain unchanged rates. In terms of technical analysis, the USD/JPY price is rebounding after testing a strong support trendline, with potential for a bullish sentiment shift. Bulls may challenge the key resistance level at 158.01, with a break indicating a continuation of the bullish trend towards levels above 160.00.
Overall, the outlook for USD/JPY remains positive, driven by economic data and market expectations.