USD/JPY Price Forecast: Traders seem hesitant below 158.00; US NFP awaited

USD/JPY stages a modest recovery from the weekly low amid some follow-through USD buying.
A hawkish BoJ and intervention risks limit JPY losses, capping spot prices ahead of the US NFP.
The recent range-bound price action warrants caution before positioning for a firm direction.

Haresh Menghani FXStreet

The USD/JPY pair struggles to capitalize on its intraday bounce from the weekly low, touched earlier this Friday, trading below the 158.00 mark during the early European session. Traders now look to the closely watched US Nonfarm Payrolls (NFP) report for some impetus heading into the weekend.

In the meantime, bets that the US Federal Reserve (Fed) will raise borrowing costs in December, along with persistent geopolitical uncertainties, help the US Dollar (USD) build on the previous day's bounce from the lowest level since late September. This, in turn, acts as a tailwind for the USD/JPY pair. However, the Bank of Japan's (BoJ) hawkish tilt and intervention risk limit deeper losses for the Japanese Yen (JPY), capping the upside for the currency pair.

From a technical perspective, spot prices hold a bearish near-term bias beneath the 100-day Simple Moving Average (SMA) at 159.09 and below the 50.0% Fibonacci retracement at 158.44. Meanwhile, the Relative Strength Index (RSI) at 49.37 is effectively neutral and does little to offset the downside tone. Moreover, the Moving Average Convergence Divergence (MACD) histogram has flattened just above zero, hinting at waning bearish momentum rather than a decisive recovery.

Adding to this, the recent range-bound price action witnessed over the past seven weeks or so makes it prudent to wait for a decisive breakout in either direction before determining the near-term trajectory for the USD/JPY pair. On the topside, immediate resistance is located at the 50.0% retracement at 158.44, followed by the 100-day SMA at 159.09 and the 61.8% retracement at 159.76. Above these, the 78.6% level at 161.65 and the cycle high near 164.05 form a broader cap.

On the downside, initial support is seen at the 38.2% Fibo. level at 157.12, ahead of the 156.65 region, or the lower boundary of the trading range. The 23.6% retracement at 155.48 could act as a more distant bearish target if selling pressure resumes before the USD/JPY pair eventually drops to the cycle low around 152.83.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

USD/JPY daily chart

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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