- The Bank of Japan kept interest rates unchanged on Thursday.
- Japan’s ruling party lost a majority of seats.
- The US dollar paused its gains ahead of the release of non-farm payrolls.
The outlook for the dollar/yen pair became slightly bearish as there were no dovish statements made at the Bank of Japan’s policy meeting. At the same time, the dollar stalled after mixed data in the previous session. Market focus has shifted to the upcoming NFP report and US presidential election.
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The Bank of Japan left interest rates unchanged on Thursday, as expected. However, market participants were expecting more dovish rhetoric after Japan’s recent elections. Japan’s ruling party lost a majority of seats, creating uncertainty in the political situation. As a result, traders were pricing in more caution and sending a message about a delay in rate hikes. However, there was no such message, and the yen continued to appreciate.
Meanwhile, the US dollar paused its gains ahead of non-farm employment data and the US presidential election. Recent reports have shown mixed economic conditions, and the Fed’s outlook for rate cuts remains largely unchanged. Wednesday’s data showed a stronger-than-expected increase in private employment. Private employers created an additional 233,000 jobs in October, well above expectations of 110,000. A separate report showed economic growth in the third quarter was 2.8%, lower than the expected 3.0%.
Nevertheless, the labor sector remains resilient. Therefore, there will be less pressure on the Fed to lower borrowing costs. Currently, attention is focused on the PCE price index and the non-farm payroll report. Economists expect job growth to slow in October.
At the same time, traders are becoming cautious ahead of the U.S. presidential election, which could affect fiscal and monetary policy.
Today’s USD/JPY major events
- US Core PCE Price Index m/m
- US Employment Cost Index QoQ
- U.S. unemployment insurance claim
USD/JPY technical outlook: bears win the battle for leadership at 30-SMA
On the technical side, USD/JPY Price is below the 30-SMA and 153.00 support levels, indicating a bearish sentiment change. At the same time, the RSI is below 50, suggesting solid bearish momentum.
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This change occurs after the RSI undergoes a bearish divergence, indicating that bullish momentum is fading. Still, bears need to cut the highs and lows to confirm a new downtrend. If this happens, the price will revisit support levels such as 150.00 and 148.00.
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https://www.forexcrunch.com/blog/2024/10/31/usd-jpy-outlook-yen-rebounds-after-boj-meeting/