Outlook for USD/JPY and Cross-Yen: Limited Upside, Waiting for Tomorrow's Events

Outlook for USD/JPY and Cross-Yen: Limited Upside, Waiting for Tomorrow's Events

Yesterday, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) announced its annual revision, showing a downward adjustment of 818,000 jobs for the period from April 2023 to March 2024. During this period, employment was expected to increase by 2.9 million, representing a downward revision of about 28%.

In response, expectations for rate cuts in the U.S. market have strengthened further, but since the rate cut is already priced in, the focus has shifted to whether a 0.50% rate cut will materialize. Currently, the short-term interest rate market favors a 0.25% rate cut, which is tempering the impact on the market.

The market is now focused on Fed Chair Powell’s speech at the Jackson Hole Symposium tomorrow, and movements are likely to be subdued until then. Today, USD/JPY is expected to trade within a narrow range around 145 yen, with a willingness to sell on rebounds, although downward pressure is also expected to be cautious.

Outlook for EUR/USD and EUR/JPY

EUR/USD is trading around the mid-1.11 range. Meanwhile, there is increased caution about a potential downside in EUR/JPY, and if it breaks below the mid-161 yen level from the current range around 162 yen, further declines may occur.

Today's Key Points

Today, the downward revision in employment numbers has created a bearish mood for USD. However, attention should be paid to the U.S. PMI data to be released, as it could have a significant impact on the market.