USD/JPY Bulls to Target 143 on Hawkish Post Jobs Report Fed Chatter

Highlights

• It is a testy day ahead for the USD/JPY, with Fed speakers in the spotlight after the US Jobs Report.
• FOMC members Bowman and Harker could give investors a Fed perspective of the US Jobs Report.
• The near-term technical indicators turned bearish, signaling a retreat to sub-141.

On Friday, the USD/JPY fell by 0.59% to wrap up the day at 141.686. Falling US Treasury yields and the US Jobs Report left the dollar on the back foot.

This morning, there are no economic indicators from Japan or China for investors to consider. The lack of economic indicators will leave investors to respond further to the US Jobs Report and the implications vis-à-vis the September Fed interest rate decision.

According to the CME FedWatch Tool, the probability of a Fed hold stood at 87.0% on Friday, up from 80.0% one week earlier and 66.7% one month ago. However, Fed speakers and the US CPI Report (Thurs) will materially influence sentiment.

The US Session

There are no US economic indicators to influence the afternoon session. However, Fed chatter could move the dial.

FOMC members Bowman and Harker are on the calendar to speak today. References to the US Jobs Report, the latest Core PCE Price Index numbers, and the September Fed interest rate decision will draw interest.

With the markets betting on a Fed hold on interest rates in September, much can change this week. Hawkish Fed chatter and hotter-than-expected inflation numbers on Thursday could reignite bets on a 25-basis point interest rate hike. However, a more hawkish outlook could also raise the threat of an economic recession.

USD/JPY Price Action

Daily Chart

The Daily Chart showed the USD/JPY sitting below the upper level of the 141.9 – 141.2 support band. Despite Friday’s bearish session, the USD/JPY remained above 50-day (140.654) and 200-day (137.124) EMAs, sending bullish near and longer-term price signals.

Notably, the 50-day EMA pulled further away from the 200-day EMA, affirming the bullish trend.

Looking at the 14-Daily RSI, the 52.69 reading signals a bullish outlook, supporting a breakout from the 141.9 – 141.2 support band to target the 144.3 – 145.0 resistance band. However, a USD/JPY fall through the 141.9 – 141.2 support band would give the bears a run at the 50-day EMA (140.654).

4-Hourly Chart

Looking at the 4-Hourly Chart, the USD/JPY faces strong resistance at 142. The USD/JPY sits below the upper level of the 141.9 – 141.3 support band and the 50-day EMA (141.957). However, the USD/JPY remains above the 200-day EMA (141.168), sending bearish near-term but bullish longer-term price signals. Significantly, the 50-day EMA narrowed on the 200-day EMA, signaling further losses.

A fall through the 141.9 – 141.2 support band would bring the 200-day EMA ($141.168) into play. However, a USD/JPY move through the 50-day EMA (141.957) would give the bulls a run at the 143 to target the 144.3 – 145.0 resistance band.

The 14-4H RSI reading of 43,83 sends bearish signals, with selling pressure outweighing buying pressure. Notably, the RSI aligns with the 50-day EMA, supporting a fall through the 200-day EMA (141.168) to bring the 139.5 – 138.8 support band into view.