USD/JPY Price Forecast - Dollar to Yen Climbs to ¥149.95 as Policy Divergence and U.S. Labor Data Push Dollar Toward ¥151

USD/JPY Breaks to ¥149.95 as Dollar Strength and BoJ Hesitation Stretch Divergence

The USD/JPY pair ended the week near ¥149.95, its highest close in eight weeks, fueled by widening monetary policy divergence between the Federal Reserve and the Bank of Japan. The move capped a weekly rally of 1.07%, with the pair climbing from a low of ¥147.46 to just shy of the psychological ¥150 barrier. Technical momentum accelerated as price cleared the resistance zone around ¥148.80, breaking out of a long consolidation band and setting the stage for a potential test of the March high near ¥151.30. The yen’s weakness reflects fading expectations for an imminent BoJ hike, even as U.S. economic resilience tempers bets on Fed cuts.

BoJ Caution Keeps Yen on Defensive as Policy Divergence Widens

The Bank of Japan remains reluctant to tighten policy despite inflation remaining above target, with the September meeting revealing two dissents against holding the short-term rate at 0.5%. The upcoming Summary of Opinions will be closely scrutinized for signals of broader appetite for an October adjustment. Governor Kazuo Ueda faces pressure to address yen depreciation, yet Tokyo’s August CPI slowdown has emboldened dovish voices. Traders note that unless retail sales, Tankan surveys, and labor market data shift decisively hawkish, the yen may continue to face selling pressure against the dollar.

Fed Data Calendar Keeps Dollar Bid as Labor Market Holds Firm

The U.S. dollar’s strength against the yen is underpinned by robust data. The CB Consumer Confidence Index is forecast to ease slightly to 96, down from 97.4, while JOLTs job openings are expected at 7.1 million. More critical is the September Nonfarm Payrolls, projected at +39,000, following August’s +22,000. The unemployment rate is expected to hold at 4.3%, with average hourly earnings up 3.7% year-on-year. Should payrolls surprise to the upside, Fed officials may hold back from signaling aggressive cuts, reinforcing dollar support. Softer labor numbers, however, could trigger renewed speculation of an October cut, offering the yen a temporary reprieve.

Technical Picture Tilts Bullish with Key Levels in Focus

On the daily chart, USD/JPY trades firmly above both the 50-day and 200-day EMAs, underscoring bullish momentum. The breakout from the symmetrical triangle pattern that held since January points to a shift in trend bias. Immediate resistance lies at ¥150.91, the August high, with a decisive daily close above opening the path toward ¥154.80. On the downside, ¥149.35 is the first key support, followed by the ¥146 zone which previously capped the summer consolidation. A break under ¥146 would invalidate the bullish breakout and suggest the pair is still locked in sideways trade, but as long as price holds above ¥149, the path of least resistance is higher.

Macro Events Reinforce Yen Weakness Despite Breakout Risks

Japan’s retail sales, due Tuesday, are forecast to rise 1% month-on-month in August after a 1.6% fall in July, offering a possible inflationary signal. The Tankan Large Manufacturers Index is projected at 15, up from 13, but risks remain from U.S. tariffs weighing on demand. Consumer confidence is expected at 35.2 versus 34.9 prior, while unemployment is set to tick up to 2.4%. Taken together, these indicators are unlikely to shift the BoJ decisively hawkish unless data surprises. Meanwhile, Fed officials are scheduled to speak throughout the week, and their guidance on inflation and labor markets could magnify volatility in USD/JPY positioning.

Verdict on USD/JPY: Buy Bias Intact Toward ¥151 and ¥154 if Fed Holds Line

The yen’s fundamental weakness combined with a confirmed technical breakout leaves USD/JPY skewed to the upside. Unless U.S. data collapses or the BoJ pivots sharply hawkish, the pair is positioned to retest ¥150.91 and potentially extend toward ¥154.80 over the coming weeks. Short-term dips into the ¥148.50–¥149.00 range appear buyable, with downside risk limited unless the pair breaks below ¥146. For now, USD/JPY remains a Buy, with bullish positioning supported by widening yield differentials and fragile BoJ credibility.

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