Japanese Yen Weekly Forecast: USD/JPY Holds Highs as Key Data Looms

Bank of Japan policy uncertainty collided with fading Fed rate cut bets, sending USD/JPY to a nine-month high of 155.044. The Japanese government’s fiscal policy plans and ultra-loose monetary policy stance also weighed on the yen as intervention threats fell on deaf ears.

The US government reopening, combined with FOMC members downplaying the chances for a December Fed rate cut, boosted demand for the greenback. Despite the US government reopening, a lack of key US inflation and jobs data left traders and the Fed focused on tariffs and inflation, a growing concern among FOMC members.

USD/JPY ended the week at 154.52, up 0.72% for the week ending November 14.

Key Japanese Economic Indicators to Spotlight the Bank of Japan

In the week ahead, several crucial Japanese economic indicators could shift sentiment toward the BoJ rate path, potentially triggering a USD/JPY reversal. Rising bets on a December or potentially January rate hike would narrow the US-Japan rate differential in favor of the yen.

Key stats include third-quarter GDP, trade, inflation, and flash private sector PMI numbers.

Private Consumption and GDP in Focus

On Monday, November 17, third-quarter Japanese GDP numbers are likely to fuel speculation about a BoJ rate hike. Economists forecast the economy to contract by 0.6% quarter-on-quarter (QoQ) in Q3 after expanding 0.5% in the previous quarter.

An economic contraction would reflect the effect of US tariffs on external demand, dampening bets on a December rate hike. BoJ policymakers raised concerns about US trade policies adversely affecting the Japanese economy. For context, Japan’s trade-to-GDP ratio sits above 45%, underscoring the importance of external demand for the economy.

Notably, the third quarter numbers will not reflect the full effect of the US lowering tariffs on Japanese goods to 15% in September. Nevertheless, weakening external demand would likely fuel calls from policymakers for more time to assess the effects of tariffs on the economy.

Private consumption trends will also face scrutiny amid concerns over the weaker Japanese yen pushing import prices higher. Rising import prices could weaken household purchasing power, potentially curbing consumption, while pushing consumer prices higher.

Economists expect private consumption to rise 0.1% QoQ, down from 0.4% in the third quarter.

Trade Data Takes Center Stage as Yen Weakness Intensifies

While economists expect external demand to weaken in the third quarter, October’s trade data could shift sentiment. Economists forecast Japanese exports to rise 1.1% year-on-year (YoY) in October, down sharply from 4.2% in September. Meanwhile, economists expect imports to fall 0.7% (September: +3.3%), signaling weakening domestic demand.

Cooling external demand may further reduce expectations of a BoJ rate hike, weighing on the yen.

Crucially, waning demand could indicate a further loss of economic momentum early in Q4, signaling a more dovish BoJ policy stance.

National Inflation and Private Sector PMIs Take the Spotlight

On Friday, November 21, traders should brace for Japanese inflation figures and flash PMI numbers, which are likely to face intense market scrutiny.

Economists forecast the so-called ‘core-core’ inflation rate to rise from 3% in September to 3.1% in October. Rising import prices could push inflation higher, potentially fueling calls for tighter monetary policy to support the yen. Hotter-than-expected inflation numbers may revive hopes for a BoJ rate hike, bolstering demand for the yen.

Meanwhile, Japan’s PMI reports will provide traders further insights into economic momentum midway through the fourth quarter. The S&P Global Services PMI will be the focal point, given that the services sector contributes over 70% to Japan’s GDP.

Economists expect the Services PMI to drop from 53.1 in October to 52.8 in November. A sharper-than-expected drop would likely point to a less hawkish BoJ rate path, weighing on the yen.

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 hawkish BoJ comments. These scenarios could push USD/JPY toward 150.
• Bearish Yen Scenario: Weak data or a dovish BoJ rhetoric. These scenarios may drive USD/JPY toward 157.

Although Japanese data, BoJ commentary, and intervention jitters will influence yen demand, traders should closely track delayed US data and Fed speeches.

Labor Market Data, Inflation, the Services PMI, and the Fed in Focus

As Japan’s policy outlook remains uncertain, traders should prepare for a pivotal week for the US dollar. Delayed inflation and jobs data will take center stage, potentially fueling speculation about Fed rate cuts and USD/JPY volatility.

Key data releases for the week ahead include:

• ADP Employment Change Weekly (November 18).
• US Annual Inflation Rate (TBD): Economists forecast the inflation rate to rise from 3% in September to 3.1% in October.
• Initial Jobless Claims (November 20): Expected to rise from 218k week ending September 20 to 262k week ending November 15.
• S&P Global Services PMI (November 21): Forecast to fall from 54.8 in October to 54 in November.

Softer-than-expected US inflation, weaker jobs data, and slower services sector activity could lift bets on a December Fed rate cut. A more dovish Fed policy stance could push USD/JPY toward 150.

However, tariffs are likely to push inflation higher, while jobs data is likely to signal a further deterioration in labor market conditions. Given the Fed’s growing concerns about inflation, rising consumer prices would further reduce bets on Fed rate cuts, sending USD/JPY higher on stronger demand for the US dollar.

Beyond the data, traders should closely monitor FOMC members’ reactions to incoming data. FOMC members John Williams, Christopher Jefferson, Neil Kashkari, Christopher Waller, Lorie Logan, Michael Barr, Beth Hammack, Lisa Cook, and Austan Goolsbee are on the calendar to speak.

While the FOMC meeting minutes on Wednesday, November 19, will draw interest, incoming data and Fed chatter will be key for USD/JPY trends.

Short-term Forecast:

• Bullish US Dollar Scenario: Rising US inflation and hawkish Fed chatter may send USD/JPY toward 157.
• Bearish US Dollar Scenario: Cooling US inflation and dovish Fed rhetoric could push USD/JPY toward 150.

USD/JPY Price Action

Daily Chart

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

A break above the November 12 high of 155.044 could pave the way toward the February 2025 high of 155.880. A sustained move through 155.880 may bring the 156.884 resistance level into play.

On the downside, a drop below 153 could expose the 50-day EMA. If breached, 150 would be the next key support level.

Key Takeaway

The USD/JPY pair has gained 0.34% in November, consolidating October’s 4.2% surge. Key economic data and central bank cues could materially shift sentiment in the week ahead.

Weaker Japanese data and rising US inflation could drive USD/JPY deep into the intervention zone, 155-160. A break above 155 would likely trigger yen intervention threats. However, markets will need convincing, given Prime Minister Takaichi’s policy stances, which remain headwinds for the yen.

Consult our economic calendar for historical and upcoming data.