USD/JPY Price Forecast – Dollar-Yen at ¥147.28 Braces for Payroll Shock

USD/JPY Anchored Around 147.00 as Fed Cut Bets Intensify

The USD/JPY pair continues to pivot around the 147.00 level, showing resilience despite heavy macro pressure. On Monday’s session, the pair traded at ¥147.28 after a muted holiday market, recovering slightly from lows of ¥146.84 but still capping gains below the 148.00 handle. August was punishing, with the dollar-yen pair posting a 2.4% monthly decline, the steepest since April, as traders ramped up bets on Federal Reserve easing. Futures markets now price a 90% probability of a 25 bp cut at the September meeting, with talk of a larger 50 bp move circulating should payroll data surprise negatively.

Fed Policy Outlook and Payroll Data Drive Dollar-Yen Dynamics

Short-term positioning on USD/JPY has been tightly linked to shifts in the Fed funds curve. A correlation coefficient of 0.79 between the pair and front-end futures underscores how sensitive the yen-dollar trade has become to U.S. monetary policy bets. Consensus looks for nonfarm payrolls to add 78,000 jobs in August, a marginal uptick from July’s 73,000. Unemployment is projected at 4.3%, up from 4.2%, with risks of a print as high as 4.4% sparking chatter of deeper easing. Should unemployment edge higher while wages stall, the market would accelerate expectations for the Fed to slash rates by 50 bp, a move likely to push USD/JPY through the 146.00 barrier and down toward April’s trendline support at 145.20, with a further liquidity pocket at 144.44.

Japanese Data Offers Limited Influence as BoJ Weighs Options

Economic releases from Japan have had little impact on USD/JPY pricing. Tokyo inflation slowed to 2.5% in August from 2.9%, aligning with forecasts and reinforcing a softer inflationary environment. Despite this, BoJ policymakers remain cautious. Rate hike odds stand near 50%, with Governor Ueda and board member Nakagawa both citing risks from global trade disputes and tariff uncertainty. Market pricing assigns less than a 40% probability of a September hike, leaving BoJ policy more reactive than proactive. Trade tensions also loom, with Japan’s negotiators delaying talks with Washington over rice purchases following the U.S. court ruling that Trump’s tariffs were illegal. The Supreme Court is set to decide the matter, leaving the yen caught in geopolitical crosswinds.

Technical Landscape: Support at 146.25, Resistance at 148.75

The technical profile of USD/JPY highlights consolidation between 146.25 and 148.75. Momentum remains neutral, with RSI hovering just under 50 and MACD stuck in negative territory. A sustained move below 146.25 would expose ¥146.00 and then ¥145.20, with further room down to ¥144.44 if selling accelerates. Conversely, a breakout above 148.75 would bring the 200-day moving average at 148.85 into view, followed by the critical 149.00 level and a possible run toward 151.00. Traders are holding back ahead of Friday’s payrolls, suggesting that whichever way the data swings could dictate the next decisive move.

Market Sentiment and Currency Crosses Reinforce Pressure

The yen remains the standout gainer in August, strengthening 2.3% against the dollar and outperforming most major peers. Over the last 30 days, JPY gained 2.24% versus NZD and 1.68% against CAD, underscoring broad-based strength driven by safe-haven demand. Still, the U.S. Dollar Index (DXY) slipped to 97.55, reflecting weakness not just against the yen but also versus the euro and pound. This currency heat map confirms that while yen appreciation has eased in early September, the broader dollar slump is capping any rebound momentum in USD/JPY.

Policy Politics and Insider Influence at the Fed

Beyond macro data, political developments are feeding into USD/JPY pricing. Trump’s nomination of Stephen Miran for the vacant Fed governor role faces Senate hearings this week, adding uncertainty to the FOMC composition. At the same time, questions remain over whether Lisa Cook will retain voting rights in the September meeting. Any sign of a dovish-leaning Fed board would reinforce market pricing for aggressive cuts. Historically, insider shifts at the Fed influence bond yields, which in turn directly channel into dollar-yen. With U.S. Treasuries trading at multi-week lows, the yen remains positioned as the beneficiary of any further U.S. policy uncertainty.

USD/JPY Trading Bias and Decision

At ¥147.28, USD/JPY sits at a knife-edge ahead of critical catalysts. If payrolls confirm labor market weakness, a decisive break under ¥146.00 is likely, exposing deeper downside toward ¥144.00. If, however, jobs surprise on the upside and unemployment holds at 4.2% or lower, the dollar could regain strength and force a breakout above 148.75, challenging ¥149.00 and potentially ¥151.00. Given the balance of risks, the bias tilts bearish with a HOLD recommendation at current levels. Downside targets remain dominant unless bulls reclaim momentum above the 200-day average.

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