USD to JPY forecast: USD/JPY drops sub 150 ahead of key us data

The markets are looking interesting ahead of the new month starting next week. The USD/JPY pair has fallen, testing liquidity below the key 150.00 level ahead of key US economic data reports, including jobs data due on Friday. In addition to the jobs report, several other macro reports are scheduled for next week, such as the ISM Manufacturing PMI on Monday and the ISM Services PMI on Wednesday. Sandwiched between these is the JOLTS Job Openings report, which has gained increased attention recently as the Federal Reserve shifts its focus from inflation to employment. These upcoming data releases will undoubtedly impact the JPY to USD forecast ahead of both the Fed and BoJ policy meetings later in December.

BoJ rate hike expectations rise, underpinning yen

Meanwhile, expectations are rising that the Bank of Japan may hike interest rates in December, contributing to the yen's strength across the board, not just against the US dollar. The EUR/JPY for example is looking quite weak after breaking the 160.00 level, as it probes the 158.00 area, with the euro falling out amid all political and economic troubles in Europe.

USD/JPY drops to sub 150 support

Source: TradingView.com

Ahead of the abovementioned macro events, the dollar has weakened, as reflected in its performance against the yen. The USD/JPY is now testing the key 150 level, marked by the shaded blue area on the chart that had previously acted as resistance. This zone could provide a tradable bounce, potentially pushing the pair back toward the 200-day moving average and the resistance area around 151.30-152.00. This is the next key level to watch on the upside if a bounce occurs. However, if the support at 150.00 fails decisively, i.e., we see daily close below the 149.40-150.00 range, then it could open the door for a drop to 147.20 or even lower in the coming days.

USD/JPY forecast: Looking ahead to the first week of December

The week’s economic calendar is filled with US macro pointers, including ISM manufacturing PMI on Monday and Services PMI on Wednesday and the official nonfarm payrolls report on Friday. But with the Fed being laser focused on employment, we think that makes this JOLTS data perhaps more important than the ISM PMIs. Any signs of weakness here will increase the odds of a December rate cut, which was priced in around 66% probability as of Friday 29th November.

The week’s main data highlight will of course be the November jobs report. After a surprisingly strong report last month and following Trump’s victory in the presidential election race, investors have sharply reduced their expectations about further US interest rate cuts in 2025. The upcoming December rate decision is now a flip coin, and whether the Fed will go ahead with a cut at its last meeting for 2024 will be influenced, among other key data highlights, by this jobs report.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.