US Dollar Forecast: USD/JPY Eyes August Low as NFP Report Disappoints

US Dollar Outlook: USD/JPY

USD/JPY seems to be on track to test the August low (141.69) following the weaker-than-expected US Non-Farm Payrolls (NFP) report as it trades to a fresh weekly low (141.77), but the exchange rate may snap the recent series of lower highs and lows as the Relative Strength Index (RSI) continues to hold above oversold territory.

US Dollar Forecast: USD/JPY Eyes August Low as NFP Report Disappoints

USD/JPY extends the decline from earlier this week as the NFP report shows a 143K rise in August versus forecasts for a 160K print, and signs of a slowing economy may push the Federal Reserve to unwind its restrictive policy as Chairman Jerome Powell insists that ‘the time has come for policy to adjust.’

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In turn, speculation surrounding US monetary policy may sway USD/JPY ahead of the Federal Open Market Committee (FOMC) interest rate decision on September 18, and expectations for a change in regime may also influence the carry-trade as market participants brace for a Fed rate-cut.

With that said, USD/JPY may threaten the yearly range as it carves a series of lower highs and lows, but lack of momentum to test the August low (141.69) may keep the RSI above 30.

USD/JPY Price Chart – Daily

Chart Prepared by David Song, Strategist; USD/JPY on TradingView

The recent selloff in USD/JPY brings the August low (141.69) on the radar, with a break/close below 141.50 (38.2% Fibonacci extension) opening up the January low (140.82).
Next area of interest comes in around the December low (140.25) but failure to test the August low (141.69) may keep USD/JPY within the yearly range, and the Relative Strength Index (RSI) may show the bearish momentum abating should it continue to hold above 30.
In turn, the recent series of lower highs and lows may unravel if USD/JPY struggles to test the August low (141.69), with a move above the 145.30 (78.6% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region raising the scope for a move towards the monthly high (147.21).

Additional Market Outlooks

GBP/USD Rebound Pushes RSI Back Towards Overbought Zone

Euro Forecast: EUR/USD Opening Range for September in Focus

US Dollar Forecast: USD/JPY Rally Persists After Defending Weekly Low

Canadian Dollar Forecast: USD/CAD Rebound Emerges Ahead of March Low

--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong

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