Bank of Japan Deputy Governor Ryozo Himino raised concerns regarding the impact of exchange-rate fluctuations on economic activity and inflation. The comments from Deputy Governor Himino and board member Nakamura show a difference in focal points within the BoJ, which could lead to conflicting strategies in the future.
Investor attention will be focused on the all-important US Jobs Report scheduled for later in the week. Economists are predicting a rise in average hourly earnings by 3.9% year-on-year in May, with nonfarm payrolls expected to increase by 185k. A stable unemployment rate at 3.9% is also anticipated. Weaker-than-expected numbers could lead to speculation on a September Fed rate hike, affecting wage growth and consumer spending.
The near-term outlook for the USD/JPY will heavily depend on the US Jobs Report results. A negative outcome could prompt investor bets on multiple 2024 Fed rate cuts, impacting buyer demand for the currency pair. This scenario might push the USD/JPY below the 50-day EMA, potentially signaling a downward trend towards the 151.685 support level.
Despite the uncertainty surrounding the US labor market conditions, the USD/JPY remains above the 50-day and 200-day EMAs, indicating a bullish momentum. A breakout above the 156.500 level could pave the way for a move towards 158 and potentially the April 29 high of 160.209. Conversely, a break below the 50-day EMA could lead to a decline towards the 151.685 support level. The 14-day RSI currently sits at 49.23, suggesting a possible move towards oversold territory.
As investors continue to monitor Bank of Japan commentary and await the US Jobs Report, the USD/JPY exchange rate is facing a crucial juncture. The outcome of the report could shape market expectations and influence the direction of the currency pair in the coming days. Traders should remain vigilant and consider multiple scenarios based on economic data and central bank statements.
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