• USD/JPY outlook remains fragile after declining from the 10-month top near 158.00.
• The yen surges on intervention fears despite Japan’s downbeat data.
• Dollar remains firm after NFP surprise, awaits US PMI data ahead.

The USD/JPY outlook remains fragile on Friday, trading below the 158.00 mark after correcting from its 10-month high. The markets are bracing for a wave of macroeconomic data from both sides that could reset policy expectations. The pair’s upside earlier this week stemmed from the weaker-than-expected Q3 GDP, showing a slump in external demand. This dampened the BoJ’s near-term tightening bets, amplifying focus on incoming indicators.

Japan’s October CPI print showed mixed signals with headline inflation ticking higher to 3.0% from the previous 2.9%, while core inflation went up to 3.1%. Usually, such data would boost the hawkish sentiment, but the Q3 contraction and BoJ’s softer projection through mid-2026 capped the currency reaction. The USD/JPY pair briefly dipped to the 157.05 area, revealing skepticism about December’s rate hike.

Trade figures also reinforced slowing momentum as exports gained only 3.6% YoY, down from September’s 4.2%, with US shipments down 3.1% despite a reduction in tariffs. Imports also remained soft amid persistent yen weakness as the USD/JPY pair climbed 4.2% in October.

The Prime Minister Sanae Takaichi’s new stimulus package of 21.3 billion yen has increased expectations for long-term accommodative policy. BoJ Governor Ueda reiterated that the incoming data will determine the timing of any rate hike. Meanwhile, the Finance Minister, Katyama, issued a strong warning against intervention to counteract excessive yen weakness. His remarks stabilized the yen modestly, but policy divergence with the US keeps the broad trend intact.

Across the Pacific, the delayed US NFP data showed 119k new jobs in September, well above the expectations of 55k but balanced out by an uptick in unemployment, leaving Fed rate cut bets uncertain. Several Fed officials left cautious remarks about easing this week, helping the dollar stay firm despite the shutdown effects.
 

USD/JPY Key Events Ahead

The US PMIs and FedSpeak due later today could provide fresh impetus to the markets. The data is expected to stay the same as last month, with no significant change.
 

USD/JPY Technical Outlook: Bulls Weakening Below 158.00
 

(Click on image to enlarge)

USD/JPY 4-hour chart
 

The 4-hour chart shows consolidation near the recent high of 157.90, with bulls weakening, moving towards the 20-MA near 156.50 ahead of an order block zone around 155.70. The RSI has also started retreating from the overbought zone, revealing a potential reversal.

However, a broad trend remains bullish as long as the price remains above the key 200-day moving average (MA), which is currently around 153.20. In the short-term horizon, the price could trigger a significant pullback. Conversely, the upside could encounter first resistance near 158.00, ahead of the considerable level at 160.00.

More By This Author: