Japan’s cautious approach pushes USDJPY upwards

The USDJPY is strengthening amid ongoing uncertainty around the BoJ’s future actions. Read more in our USDJPY analysis for today, 2 October 2024.

USDJPY forecast: key trading points

• Japan’s Economy Minister, Ryosei Akazawa, urges caution on a rate hike
• Japan’s Tankan Large Producer Business Activity Index hits a two-year high
• Japan’s Consumer Confidence Index rises to 36.9 but falls short of forecasts
• USDJPY forecast for 2 October 2024: 145.38 and 146.58

Fundamental analysis

The USDJPY rate rose on Wednesday due to continued uncertainty about the BoJ’s future interest rate hike. Despite positive economic data from Japan, the JPY remains under pressure, and buyers are approaching the key resistance at 145.30.

Japan’s new Economy Minister, Ryosei Akazawa, stated that the BoJ should be cautious about further rate hikes. He also emphasised that incoming Prime Minister Shigeru Ishiba is not insisting on a rate hike unless certain conditions are met. Within the USDJPY forecast for today, this cautious approach by the authorities regarding a rate hike is exerting pressure on the yen, which is helping the USDJPY currency pair to rise.

The Bank of Japan (BoJ) Tankan Large Manufacturing Index rose to 13 points in Q3 2024, a two-year high.

Meanwhile, September data showed improved consumer confidence amid more optimistic expectations for income growth, employment, and willingness to make large purchases. The Japan Consumer Confidence Index rose to 36.9 in September 2024 from 36.7 in August, although it fell short of forecasts.

USDJPY technical analysis

In our USDJPY technical analysis, the H4 chart shows an upside impulse to 144.52, followed by a correction to 143.06. Today, 2 October 2024, we expect a consolidation range to form between these levels. If the USDJPY moves upwards, there is a possibility of an extension to 145.38, with the trend continuing towards 146.58. Should the pair exit downwards from this range, we anticipate a move to 142.10, with further downside potential to 137.77.

Summary

Despite positive economic data, uncertainty in Bank of Japan policy continues to weaken the yen, which favours the USDJPY currency pair. Technical indicators for today’s USDJPY forecast suggest considering the possibility of continuing the growth wave towards the levels of 145.38 and 146.58.