The non-farm payrolls storm is coming! The US dollar is on fire, but the yen's nightmare continues? The 150 mark has been broken!
2025-08-01 10:28:28
During the Asian session on Friday (August 1st), the USD/JPY remained relatively strong and volatile, trading around 150.80, up 0.04%, extending its 0.91% overnight gain and extending its six-day upward trend. Slightly weaker-than-expected Japanese core inflation data weakened support for the yen, while the short-term stabilization of the US dollar index contributed to a slight rise in the exchange rate. The Nikkei 225 index fell slightly by 0.32% in early trading to 40,926 points, remaining within its historically high range.
Dollar strengthens ahead of non-farm payrolls data
The US dollar continues to enjoy broad support, keeping the short-term USD/JPY bullish. The Federal Reserve's hawkish tone combined with stronger-than-expected economic data has kept the US dollar in high demand ahead of Friday's monthly jobs report.
Core PCE data and initial jobless claims data released on Thursday also helped extend the dollar's gains, while the Bank of Japan's neutral policy tone kept pressure on the yen.
Core PCE data is hot ahead of non-farm payrolls
The strong data and concerns about persistent core inflation reinforced the Federal Reserve's cautious stance.
The core PCE data released on Thursday came in slightly above expectations, coming in at 2.8% compared to expectations of 2.7%.
At the same time, initial jobless claims data was better than expected, recording 218,000, while the expected 224,000; the employment cost index in the second quarter rose to 0.9% month-on-month, exceeding expectations, indicating inflationary pressure.
Thursday's data came on the heels of stronger GDP figures released the previous day, when we also got a better-than-expected ADP private sector jobs report.
Focus on US non-farm payroll data
The focus will now turn to Friday's non-farm payroll data, which could further influence interest rate expectations.
Powell highlighted the unemployment rate as a key indicator, so any positive surprises could reinforce the Fed's current stance.
But will we see the worst jobs report of 2025? Expected jobs are 106,000, with weekly wages up 0.3% month-over-month and the unemployment rate expected to be 4.2%.
But the lack of leading indicators in this month's jobs report has increased uncertainty about the release.
Bank of Japan raises inflation outlook but warns of growth risks
Across the Pacific, the Bank of Japan kept its policy rate unchanged at 0.5% on Thursday, a decision widely expected.
The central bank sent a subtly hawkish message by sharply raising its inflation forecast for fiscal 2025 to 2.7% from 2.2%.
The upward revision reflects ongoing price pressures, particularly in food and energy, and suggests policymakers may be considering further tightening.
But that was offset by the Bank of Japan's acknowledgement of the risk of a broader economic slowdown, which will ultimately take precedence over any short-term inflation surge in terms of policy changes.
As always, any future rate hikes are expected to be gradual and highly data dependent.
Overall, the meeting was neutral, which allowed the Japanese Yen to weaken further.
Technical analysis: Forecast that the price center of the US dollar and Japan will rise
USD/JPY continues to exhibit a bullish pattern, with the pair consistently printing higher tops and higher bottoms since bottoming out in the long-term 140.00 support area in April.
As a result, USD/JPY has risen above its short-term 21-day exponential moving average and its long-term 200-day exponential moving average.
These developments suggest continued bullishness for the instrument from a technical perspective.
USD/JPY broke further and climbed above the psychologically important 150.00 level.
Can it continue to rise to 151.00 or even higher? The key support levels to watch now are first 150.00, followed by 149.55, which marks the 200-day exponential moving average.
Beneath this, 149.20 has become support, followed by 148.65 – these levels were previously resistance.
(USD/JPY daily chart, source: Yihuitong)
At 10:27 Beijing time, the USD/JPY exchange rate is: 150.82/83.
Dollar strengthens ahead of non-farm payrolls data
The US dollar continues to enjoy broad support, keeping the short-term USD/JPY bullish. The Federal Reserve's hawkish tone combined with stronger-than-expected economic data has kept the US dollar in high demand ahead of Friday's monthly jobs report.
Core PCE data and initial jobless claims data released on Thursday also helped extend the dollar's gains, while the Bank of Japan's neutral policy tone kept pressure on the yen.
Core PCE data is hot ahead of non-farm payrolls
The strong data and concerns about persistent core inflation reinforced the Federal Reserve's cautious stance.
The core PCE data released on Thursday came in slightly above expectations, coming in at 2.8% compared to expectations of 2.7%.
At the same time, initial jobless claims data was better than expected, recording 218,000, while the expected 224,000; the employment cost index in the second quarter rose to 0.9% month-on-month, exceeding expectations, indicating inflationary pressure.
Thursday's data came on the heels of stronger GDP figures released the previous day, when we also got a better-than-expected ADP private sector jobs report.
Focus on US non-farm payroll data
The focus will now turn to Friday's non-farm payroll data, which could further influence interest rate expectations.
Powell highlighted the unemployment rate as a key indicator, so any positive surprises could reinforce the Fed's current stance.
But will we see the worst jobs report of 2025? Expected jobs are 106,000, with weekly wages up 0.3% month-over-month and the unemployment rate expected to be 4.2%.
But the lack of leading indicators in this month's jobs report has increased uncertainty about the release.
Bank of Japan raises inflation outlook but warns of growth risks
Across the Pacific, the Bank of Japan kept its policy rate unchanged at 0.5% on Thursday, a decision widely expected.
The central bank sent a subtly hawkish message by sharply raising its inflation forecast for fiscal 2025 to 2.7% from 2.2%.
The upward revision reflects ongoing price pressures, particularly in food and energy, and suggests policymakers may be considering further tightening.
But that was offset by the Bank of Japan's acknowledgement of the risk of a broader economic slowdown, which will ultimately take precedence over any short-term inflation surge in terms of policy changes.
As always, any future rate hikes are expected to be gradual and highly data dependent.
Overall, the meeting was neutral, which allowed the Japanese Yen to weaken further.
Technical analysis: Forecast that the price center of the US dollar and Japan will rise
USD/JPY continues to exhibit a bullish pattern, with the pair consistently printing higher tops and higher bottoms since bottoming out in the long-term 140.00 support area in April.
As a result, USD/JPY has risen above its short-term 21-day exponential moving average and its long-term 200-day exponential moving average.
These developments suggest continued bullishness for the instrument from a technical perspective.
USD/JPY broke further and climbed above the psychologically important 150.00 level.
Can it continue to rise to 151.00 or even higher? The key support levels to watch now are first 150.00, followed by 149.55, which marks the 200-day exponential moving average.
Beneath this, 149.20 has become support, followed by 148.65 – these levels were previously resistance.
(USD/JPY daily chart, source: Yihuitong)
At 10:27 Beijing time, the USD/JPY exchange rate is: 150.82/83.
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