USD/JPY on the rise ahead of jobs report

The USD/JPY pair climbed 0.48% to 152.10 on Friday, supported by the US Dollar’s resilience amid cautious commentary from Federal Reserve officials. With the US labor market remaining solid, traders are eyeing the upcoming Nonfarm Payrolls (NFP) report, which is expected to show a 175k job gain for January. A whisper estimate suggests a slightly stronger 199k reading, signaling continued labor market strength.

With expectations pointing to an unchanged unemployment rate of 4.1% and wage growth stabilizing at 3.8% YoY, markets remain attentive to any surprises in the data. Given recent jobless claims trends and other indicators, there is potential for an upside surprise, which could reinforce the Fed’s cautious stance on rate cuts.

Federal Reserve policymakers continue to push back against early rate cuts. Dallas Fed’s Logan noted that even if inflation moves closer to 2% in the coming months, it would not necessarily justify imminent easing. She emphasized that a stable labor market coupled with lower inflation would signal a neutral policy stance, leaving little room for near-term cuts. Meanwhile, Chicago Fed’s Goolsbee highlighted growing fiscal uncertainties, suggesting they could slow the pace of future rate reductions. Fed officials Bowman and Kugler are also set to speak later today, potentially providing additional insights on monetary policy direction.

In fact the Fed's sentiment index remains deep in hawkish territory and provides a cushion to the US Dollar but the bank's stance might change after today's data.

USD/JPY Technical outlook

USD/JPY continues to gain traction, with technical indicators recovering from recent lows. The Relative Strength Index (RSI) is near the 30 level which suggests intense selling pressure which could trigger a correction. If buying interest persists, the pair could extend gains toward resistance at 152.50, while support remains at 151.50. The outlook favors the bulls, provided the pair holds above key levels.