USDJPY traded downwards in the New York session on Wednesday as ADP labour data and ISM manufacturing data came out weaker than expected. The pair traded at 142.65 at the time of writing, down by 0.9% on the day. Strong April JOLTS Jobs Openings gave the US dollar some propulsion on Tuesday, but that traction has been lost after ADP Non Farm Payrolls numbers came out.
The private sector-focused ADP Employment Change numbers for May came out at 31,000, substantially below analysts’ forecast figure of 110,000. The official government-issued NFP data will be out on Friday, and will provide a better perspective of the impact of trade tariffs on the US economy.
However, the USDJPY pair has support from Bank of Japan Governor Kazuo Ueda’s comments that the central bank will only raise interest rates if the economy proves strong enough to sustain growth. Some investors have been anticipating a hike in Japan’s interest rates especially after April’s inflation rate rose significantly by 4.6%.
However, the BoJ policymakers have a delicate balance to ensure that the impact of US trade tariffs does not weaken wage growth and subdue consumer demand. Looking ahead, US NFP data and unemployment rate figures will have a deeper bearing on the Federal Reserve’s interest rate decision after Personal Consumption Expenditure (PCE0 figures matched analysts’ projections last week.
USDJPY Forecast
USDJPY pivots at 143.14 and resistance at that level favours the downside to prevail. The pair will likely go lower and find the first support at 142.41. Breaking below that level could clear the path to an extended decline to test 142.00.
Alternatively, going above 143.14 will signal control by the buyers. That will likely see primary resistance encountered at 143.77. Breaking above that level will invalidate the downside narrative, with an extended bullish momentum potentially pushing the pair to test 144.41.
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