The recent upward rebound attempts of the USD/JPY currency pair stopped at 137.85 yesterday. It returned to stability around 136.30 at the time of writing, which confirms that the bulls are looking for stimulus factors. They are counting on the results of the upcoming US economic data before the US Federal Reserve meeting next week to get what they want.
Prior to that, official data indicated that growth in US employment costs moderated in the fourth quarter and that productivity rebounded in labor market results that the US Federal Reserve is likely to welcome. In this regard, the US Bureau of Labor Statistics said that employee productivity in the non-farm sector rose by 0.8% during the third quarter, not the 0.3% initially reported, after additional information indicated that hourly production rose faster than the number of hours by employees during Period.
Employee production rose by 3.3% in the last quarter while number of hours worked increased by less than 2.5%, implying that the productivity and competitiveness of the non-farm sector improved in Q3 results that would be uninflated if it continues for much longer. The moderating growth in unit labor costs in the fourth quarter, which owes in part to the improvement in productivity, is also expected to moderate inflation if it continues for longer, and the Fed is also likely to welcome that.
Wages, salaries, and employee benefits are some of the biggest costs faced by employers and especially those in the US family-providing services sector, making them a major influence on inflation and relevant to the Federal Reserve's interest rate outlook. Employee earnings have risen more than five percent year-on-year in recent months due in part to the still-low level of unemployment and limited labor supply, which has the Fed fearing labor market inflation and eyeing rate relief.
A seemingly strong US labor market and strong wage growth were among the reasons Federal Reserve Chairman Jerome Powell reiterated last Wednesday that he expects US interest rates will eventually need to be raised above the 4.75% suggested in the September round of forecasts. as the peak potential.
Forecasts of the US dollar against the Japanese yen:
- According to the performance on the daily chart below, the bulls of the USD/JPY currency pair are still searching for stimulus factors to exit the descending channel.
- As mentioned before, there will be no real and strong reversal of the trend to the upside without testing the psychological resistance 140.00 again.
- The bulls are searching motivating factors for action. In the event that it fails to obtain this, the USD/JPY currency pair may be exposed to a bearish momentum to move downwards again.
- Therefore the support levels 135.30 and 134.00 may be the next targets.
- I still prefer to buy the dollar against the yen from every downward level.
- Today, the dollar will be affected by the release of the US weekly jobless claims.
Ready to trade our Forex forecast? Here’s a list of some of the best Forex trading platforms to check out.
