Japanese Yen Forecast: USD/JPY Nears 155 Ahead of US Jobs and PMI Data

The Fed and the Bank of Japan diverged from policy expectations, sending USD/JPY up 0.74% to close the week at 154.004, its highest weekly close since January 27, 2025.

Fed Chair Powell downplayed the chances of a December interest rate cut on Wednesday, October 29, lifting demand for the US dollar. Meanwhile, the Bank of Japan kept interest rates at 0.5% and dampened expectations for a December rate hike, weighing on the Japanese yen.

The USD/JPY pair advanced despite Tokyo inflation heating up in October, which would typically support a more hawkish BoJ rate path. Concerns about tariffs affecting the broader Japanese economy overshadowed the inflation data.

It could be a pivotal week ahead for the USD/JPY pair. Traders should closely monitor developments on Capitol Hill. Government agencies could begin releasing delayed US economic reports, potentially shifting the Fed’s policy stance.

Japanese economic data, BoJ rhetoric, Prime Minister Takaichi’s policy goals, and intervention threats will also influence price trends.

Manufacturing PMI to Influence the BoJ Rate Path

On Tuesday, November 4, the finalized S&P Global Manufacturing PMI will draw interest. According to the preliminary survey, the PMI slipped from 48.5 in September to 48.3 in October.

A sharper drop could reflect the effects of US tariffs on demand and price margins, supporting a more dovish BoJ rate path. BoJ Governor Kazuo Ueda signaled further delays to rate hikes earlier this week, stating:

“We would like to spend a bit more time scrutinizing wages and price moves. We will have more data on how companies, hit by 15% tariffs, would respond and set wages, including for next year.”

Wage Growth Under the Spotlight amid Tariff Concerns

With the BoJ focused on tariffs and wages, Japan’s wage growth figures will face scrutiny on Thursday, November 6. Economists forecast average cash earnings to rise 1.6% year-on-year in September, up from 1.5% in August.

Rising wages could boost household spending and fuel demand-driven inflation, supporting a December rate hike. However, wages would need to increase sharply to pressure the BoJ into a policy adjustment. Average cash earnings have tumbled since July’s 3.4% year-on-year increase.

Firms have cut prices for goods bound for the US, forcing producers to slow wage hikes to limit the impact on their bottom lines. Crucially, slowing wages could be a precursor to job cuts if tariffs continue to squeeze margins, underscoring the need for the BoJ to remain vigilant.

Additional data releases on Thursday, November 6, include finalized S&P Services PMI and Reuters Tankan Index numbers.

The Services PMI is also likely to influence the BoJ’s policy stance, given that the sector accounts for roughly 70% of Japan’s GDP. According to the preliminary survey, the S&P Global Services PMI fell from 53.3 to 52.4. A downward revision, combined with falling input and output prices, would support delaying rate hikes until 2026, weighing on the yen.

On the other hand, a higher reading could ease concerns about the economic outlook, potentially raising bets on a December rate hike.

Household Spending and Import Prices Key for the BoJ

On Friday, November 7, household spending will require consideration. Economists forecast household spending to rise 2.5% year-on-year in September, up from 2.3% in August.

A higher reading could signal a pickup in inflationary pressures, increasing bets on a December BoJ rate hike. On the other hand, a lower print may reinforce BoJ Governor Ueda’s calls to spend more time assessing incoming data.

Notably, the weaker Japanese yen could push import prices higher, potentially weakening household spending. Import price trends are a key focus for the Japanese government. Rising costs may raise speculation about an intervention, which could send USD/JPY sharply lower.

Follow our real-time updates to stay ahead of USD/JPY market developments.

USD/JPY Outlook: Economic Indicators and the BoJ

• Bullish Yen Scenario: Strong Japanese data, intervention threats, or a hawkish BoJ rhetoric could push USD/JPY toward 153. If breached, the 50-day EMA and 149.358 would be the next key support levels.
• Bearish Yen Scenario: Weak data or a dovish BoJ commentary may send the pair toward 155. A sustained move through 155 would bring the 156.884 resistance level into play.

Crucially, a rise toward 155 could raise expectations of the Ministry of Finance warning of an intervention, mirroring events in 2024. The potential for intervention will likely be the key downside risk for USD/JPY in the near-term, given that MoF warnings tend to follow sharp yen depreciation.

While Japanese economic data, BoJ forward guidance, and intervention threats will move the dial, traders should closely monitor US data, Fed chatter, and developments on Capitol Hill.

Labor Market Data, the ISM Services PMI, the Fed, and Capitol Hill in Focus

Traders may continue to face heightened USD/JPY volatility amid shifting sentiment toward the Fed and BoJ’s policy outlooks. Meanwhile, US Senate votes, economic data, and Fed commentary will also influence USD/JPY trends. Key events for the week ahead include:

• ISM Manufacturing PMI (November 3): Expected to rise from 49.1 in September to 49.2 in October.
• JOLTs job openings: (November 4): Economists expect job openings to drop from 7.227 million in August to 7.2 million in September.
• ADP Employment Change (November 5): Forecast to rise by 25k in October after falling 32k in September.
• ISM Services PMI (November 5): Expected to increase from 50.0 in September to 51.0 in October.
• Initial Jobless Claims (November 6): Dependent on the US government reopening. Expected to rise from 218k week ending September 20 to 259k week ending November 1.
• Michigan Consumer Sentiment (November 7): Forecast to rise from 53.6 in October to 54.0 in November.
• Nonfarm payrolls (November 7): Dependent on the US government reopening. Expected to rise 55k in October after September’s 61k increase.
• Unemployment rate (November 7): Dependent on the US government reopening. Forecast to remain at 4.3%.
• Average hourly earnings (November 7): Dependent on the US government reopening. Expected to increase 3.6% year-on-year in October, down from 3.7% in September.

US Data and Fed Speakers to Drive Fed Rate Cut Bets

Weaker-than-expected US labor market data, slower service sector activity, and falling consumer confidence may revive bets on a December Fed rate cut. A more dovish Fed policy stance could push USD/JPY toward 153. A break below 153 would enable the bears to target the 50-day EMA and the 149.358 support level.

Stronger-than-expected US labor market data, a higher ISM Services PMI reading, and a pickup in consumer confidence could temper expectations of a December Fed rate cut. A more hawkish Fed rate path may drive USD/JPY toward 155. A breakout from 155 could pave the way toward the 156.884 resistance level.

Beyond the data, traders should closely monitor FOMC members’ speeches for views on inflation, the economy, and the timing of further rate cuts.

Short-term Forecast:

• Bullish US Dollar Scenario: Strong US economic data and hawkish Fed commentary may send USD/JPY toward 156.884.
• Bearish US Dollar Scenario: Weak US data and dovish Fed rhetoric could push USD/JPY toward 149.358.

USD/JPY Price Action

Daily Chart

On the daily chart, USD/JPY continued to trade above the 50- and 200-day Exponential Moving Averages (EMAs), reaffirming a bullish bias.

A break above the October 31, 2025, high of 154.415 could pave the way toward 155 and the February 2025 high of 155.880. A sustained move through 155.880 may open the door to retesting the 156.884 resistance level.

On the downside, a drop below 153 could bring the 50-day EMA and the 150 psychological support level into play. If breached, 149.358 would be the next key support level.

Key Takeaway

The USD/JPY pair rallied 4.2% in October, underscoring the influence of politics, monetary policy, and economic data on sentiment.

This week’s data, central bank speeches, intervention warnings, and US Senate votes will set the stage for a pivotal week for the pair.

Consult our economic calendar for historical and upcoming data.