Title: USD/JPY Forecast: ISM Strengthens USD – Can the NFP Ignite a Break Above 150?
Author: Pablo Piovano (Credit: FXStreet)
The USD/JPY currency pair has seen a notable resurgence above the 149.00 threshold, driven by stronger-than-expected U.S. macroeconomic data. The Institute for Supply Management (ISM) released its Manufacturing PMI which surpassed market expectations, reinforcing the U.S. dollar’s bullish sentiment. As the USD continues to show resilience, traders now anticipate the upcoming Nonfarm Payrolls (NFP) report as a potential catalyst for pushing the pair beyond the psychological 150.00 barrier.
This article dives into the latest market dynamics influencing USD/JPY, the impact of recent economic indicators, technical observations, and what lies ahead as market participants await crucial employment data.
Fundamental Drivers Supporting USD/JPY
Recent economic releases out of the United States have favored the bullish outlook for the greenback, thereby supporting the USD/JPY.
Key factors supporting the USD/JPY rally:
– ISM Manufacturing PMI improved to 49.1 in February, above expectations of 48.0 and higher than the previous 47.1
– New Orders and Production indices within the report signaled expansion, adding to the broader economic strength narrative
– The report also showed a rise in Prices Paid, stoking inflation concerns and raising the potential for a longer-lasting restrictive Federal Reserve policy
– U.S. Treasury yields responded positively to the upbeat data, with the 10-year yield climbing past 4.2 percent, providing additional support to the U.S. dollar
– Fed rate cut expectations were dialed back, helping to bolster USD across major forex pairs, including the yen
All of these factors contributed to pushing USD/JPY higher, with investor attention now turning to whether upcoming employment data can reaffirm this bullish case and perhaps lead to a breakout beyond key resistance levels.
USD/JPY Technical Analysis
USD/JPY has been closely testing resistance levels that have historically capped its gains. The recent bounce above 149.00 indicates growing buying pressure.
Technical observations:
– The pair recently marked a new cycle high, nearing the 150.00 psychological barrier, which has previously prompted intervention speculation from Japanese authorities
– Price action shows strong bullish candles over recent daily sessions, confirming positive momentum
– From a longer-term perspective, the 200-day Simple Moving Average (SMA) remains below current price levels, reinforcing medium-to-long-term bullish structure
– Oscillators such as RSI (Relative Strength Index) remain within moderately overbought territory but not signaling an imminent reversal
– A clear break of 150.00 could open the door to a run toward 152.00, a level last seen in 2022 when Japan intervened to defend against excessive yen depreciation
However, traders remain cautious amid rising speculation that Japanese authorities may step in if the yen weakens substantially beyond the 150.00 mark, particularly if the move appears rapid or unbalanced.
Potential Resistance and Support Levels
– Immediate resistance sits at 150.00, defined by previous peaks and psychological relevance
– A successful break above could expose further upside toward 152.00 and even extension to 153.50 in the medium term
– On the downside, initial support lies near 148.50, followed by 147.80 and stronger demand at 147.00, where buyers earlier emerged to push the pair higher
– If sellers seize control, 146.50 becomes a deeper technical floor
Market sentiment remains tilted toward the upside as long as USD/JPY maintains daily closes above the 147.50-148.00 zone.
The Role of Japanese Policy Expectations
Japan’s monetary policy remains one of the most dovish among developed economies. The Bank of Japan (BoJ) continues its ultra-loose stance despite some expectations of tightening later this year.
Important points to consider:
– Although core inflation in Japan has
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