USD/JPY Forecast: Wages, the Bank of Japan and Fed Speakers in Focus

Highlights

• The USD/JPY fell by 0.04% on Friday, ending the session at 149.237.
• On Monday, Bank of Japan commentary will warrant investor attention as investors consider bets on an April pivot from negative rates.
• FOMC member speeches also need consideration as investors reduce bets on a March Fed rate cut.

USD/JPY Movement on Friday

The USD/JPY fell by 0.04% on Friday. After a 0.76% rally on Thursday, the USD/JPY ended the day at 149.237. The USD/JPY rose to a high of 149.574 before falling to a Friday low of 149.004.

The Bank of Japan and Bets on an April Pivot from Negative Rates

On Monday, the Bank of Japan will remain under the spotlight. On Friday, a Japan Times article discussed wage growth trends in Japan. Japanese firms are reportedly increasing entry salaries for employment, with companies, including Nomura Holdings, planning wage hikes of 16% for younger staff.

The latest report comes before the commencement of annual wage negotiations in March. Significantly, progress toward lifting wages could support the BoJ plans to pivot from negative interest rates.

On Monday, Bank of Japan comments about wages and plans to raise interest rates would move the dial.

FOMC Members in Focus Ahead of the US CPI Report

On Monday, the Fed will be in focus as investors consider the timeline for a Fed rate cut.

FOMC members Michelle Bowman and Neel Kashkari are on the calendar to speak. Recently, Bowman said it was too early to consider cutting rates. Kashkari said he needed more confidence inflation was returning to target before supporting rate cuts.

Similar comments after the latest set of US economic indicators could limit the upside for the AUD/USD. On Tuesday, the US CPI Report will be pivotal for bets on a March Fed rate cut.

There are no US economic indicators on Monday to influence the USD/JPY pairing.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on central bank speakers and the US CPI Report (Tues). Softer-than-expected US inflation could influence Fed forward guidance. In contrast, recent wage growth reports could incentivize the BoJ to commit to exiting negative rates. Rising bets on a BoJ pivot from negative rates would tilt monetary policy divergence toward the Yen.

USD/JPY Price Action

Daily Chart

The USD/JPY sat above the 50-day and 200-day EMAs, sending bullish price signals.

A USD/JPY move to the 150 handle would support a breakout from the 150.201 resistance level. A break above the 150.201 resistance level would give the bulls a run at the 151.889 resistance level.

On Monday, central bank speeches need consideration.

However, a drop below the 148.405 support level would support a fall to the 50-day EMA and the 146.649 support level.

The 14-day RSI at 62.67 indicates a USD/JPY move to the 150.201 resistance level before entering overbought territory.

4-Hourly Chart

The USD/JPY remained above the 50-day and 200-day EMAs, confirming the bullish price trends.

A USD/JPY breakout from the 149.500 handle would give the bulls a run at the 150.201 resistance level.

However, a fall through the 149 handle would bring the 148.405 support level and the 50-day EMA into play.

The 14-period 4-hour RSI at 62.97 indicates a USD/JPY break above the 150.201 resistance level before entering overbought territory.