Home USD/JPY Outlook: Rate Hike Bets Surge After Upbeat Jobs Data
Majors

USD/JPY Outlook: Rate Hike Bets Surge After Upbeat Jobs Data

  • Traders now believe the Fed is 71% likely to hike rates by another quarter point on May 3.
  • Kazuo Ueda promised to maintain the ultra-easy stimulus programs.
  • The next crucial indicator for the path of Fed policy will be the US consumer price index.

Today’s USD/JPY outlook is bullish. The US dollar pulled back slightly on Tuesday after posting its largest gain this month against major rivals. The resilience of the US labour market strengthened the argument for a Fed rate hike next month.

Are you interested to learn more about MT5 brokers? Check our detailed guide-

Traders now believe the Fed is 71% likely to hike rates by another quarter point on May 3. Data released on Good Friday showed that US businesses continued to hire quickly in March, bringing the unemployment rate down.

Kazuo Ueda, the governor of the Bank of Japan, promised to maintain the ultra-easy stimulus programs at his inauguration on Monday, contributing to the Japanese yen’s decline.

Mr Ueda must maintain a steady exchange rate since the BOJ, under his leadership, will deliberately aim to be behind the curve and raise inflation expectations.

In the second half of 2023, the US economy will likely slow down, resulting in lower long-term interest rates. However, if the BOJ takes any action to raise long-term interest rates, that might boost the yen and reverse recent good trends in Japan.

The next crucial indicator for the path of Fed policy will be the consumer price index (CPI), which is coming on Wednesday.

Since some small US banks failed in March, financial markets have been pessimistic about the American economy. High underlying CPI will probably modify market pricing for May and postpone pricing for the start of rate reductions.

Traders presently anticipate that the Fed will start lowering interest rates in September.

USD/JPY key events today

Investors are not expecting any important news releases from the US or Japan, so they will keep absorbing recent developments.

USD/JPY technical outlook: 133.51 resistance holding firm

USD/JPY technical outlook

The 4-hour chart shows USD/JPY pulling back from the 133.51 resistance level. This follows a strong bounce from the 30-SMA support that broke above the 132.51 key level. 

Are you interested to learn more about Australian forex brokers? Check our detailed guide-

There is no doubt that the current move is bullish as the price trades above 30-SMA with the RSI above 50. Therefore, this pullback might retest the 132.51 support before bulls retest the 133.51 resistance and possibly break above.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money

Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.