USD/JPY Price Forecast: Yen Strength Builds as BoJ Tightening Looms and Fed Cut Bets Rise

USD/JPY Struggles Near 147 as U.S. Labor Market Weakens

The USD/JPY pair closed the week at 147.34 after swinging between 146.78 and 149.13. Softer U.S. labor market data pushed the dollar lower on Friday, with nonfarm payrolls and unemployment revisions reinforcing bets on Federal Reserve rate cuts. A break under 146.81 briefly pressured the pair, though buyers defended support into the close. The pair now sits above the 50-day EMA but capped below the 200-day EMA, leaving traders watching whether the next move is toward the 145.00 handle or back to 150.00.

Japanese GDP and Producer Prices Set Tone for Yen Strength

Finalized second-quarter GDP showed 0.3% quarter-on-quarter growth, helped by a 0.8% rebound in external demand despite U.S. tariffs. Private consumption rose 0.2%, signaling steady domestic momentum. Japan’s record minimum wage hike of 6.3% to ¥1,121 boosts inflation expectations, intensifying speculation that the Bank of Japan may tighten policy as early as October. Producer price data due September 11 is forecast at 2.7% year-on-year, up from July’s 2.6%. A stronger print could cement expectations of a rate hike and drive USD/JPY closer to 145.

Fed Policy Outlook Hinges on CPI and Jobless Claims

Markets are pricing in a 99% chance of a 25-basis-point cut in September, with U.S. inflation projected at 2.9% for August versus 2.7% in July. Initial jobless claims are expected to tick up to 240k from 237k, signaling labor market cooling. Softer CPI and higher claims could accelerate rate cut expectations, weakening the dollar. In contrast, hotter inflation data could ease selling pressure and hold USD/JPY above 147.

Trade and Tariff Developments Add New Volatility Layer

President Trump’s tariff cut on Japanese autos from 27.5% to 15% gave yen traders another factor to weigh. Auto exports had fallen 27% year-on-year in July, raising recession fears. The tariff reduction should support exports and improve Japan’s trade terms, but if U.S. consumption weakens, the benefit may be limited. The policy shift nevertheless adds a bullish undertone for the yen as trade tensions ease slightly.

Technical Levels Define Risk Zones for USD/JPY

Immediate resistance for USD/JPY sits at the 200-day EMA near 149.35, with a breakout exposing the August high at 150.91. On the downside, support rests at 146.21, followed by the psychological 145.00 level. RSI momentum has flattened, suggesting indecision as markets await fresh catalysts. A decisive daily close below 146.20 could invite stronger yen buying, while holding above 147.50 would encourage a retest of 150.

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