USD/JPY Looks Up to 148 as Japanese Yen Weakens Due to Dismal Manufacturing PMI and BoJ-Fed Policy Divergence
Japanese Yen continues to feel the pressure from a widely stronger US Dollar, with the USD/JPY currency pair standing at the threshold of the 148.00 level due to a disheartening Japan Manufacturing PMI figure. Domestic political angst and weak manufacturing figures have created concerns about delayed BoJ interest rate hikes, with expectations of additional Fed rate cuts continuing to prop up the USD. In spite of the Yen’s weak tone, safe-haven buying and policy divergence between the BoJ and Fed could cap big losses, holding the USD/JPY pair within a classic consolidation range before major US and Japanese economic releases later this week. KEY LOOKOUTS • The latest reading of 48.4 points to the sharpest six-month contraction, keeping the Yen under pressure. • Investors closely observe for possible rate increases or dovish trends, particularly before the LDP leadership election on October 4. • Fed Chair Powell’s remarks about inflation and job preservation suggest fewer imminent rate cuts, favoring the US Dollar. • Major releases such as US New Home Sales, last GDP, PCE Price Index, and Tokyo CPI may shape USD/JPY direction in the short term. The Japanese Yen remains under pressure versus the US Dollar as poor manufacturing numbers and local political instability undermine market sentiment. Although the BoJ keeps the door open for rate increases, investor attention is pinned on the release of future economic data, ranging from the Tokyo CPI to US macro releases like GDP and PCE data. On the other hand, conflicting monetary policies—a dovish Fed forward guidance and prospective BoJ tightening—are maintaining the USD/JPY pair in a range, and the 148.00 level is being used as an important near-term resistance. Japanese Yen drops against the US Dollar on poor manufacturing figures and BoJ policy indecision. USD/JPY sticks around 148.00, with near-term action expected to be influenced by coming US and Japan economic indicators. Policy divergence between the Fed and BoJ could cap major Yen losses. • USD/JPY trades around 148.00 as the Japanese Yen weakens against a stronger US Dollar. • Japan Manufacturing PMI decreased to 48.4 in September, the quickest rate of contraction in six months. • Domestic political uncertainty leading up to the LDP leadership election may hold back BoJ rate hikes. • BoJ continues to keep policy normalization in mind despite recent economic weakness. • Fed Chair Powell’s comments indicate fewer near-term rate cuts, which are positive for USD demand. • Primary near-term data, such as US GDP, PCE, and Tokyo CPI, will have the potential to shape USD/JPY direction. • Technicals show resistance at 148.00–148.55 and support at 147.00–146.20 levels. The Japanese Yen continues to be pressured as poor manufacturing statistics and local political instability are creating overhang on the market mood. The S&P Global Japan Manufacturing PMI dropped to 48.4 in September, the steepest decline in six months, and yet another sign of stress for the Japanese economy. Investors are carefully monitoring the Bank of Japan’s policy stance, particularly the Liberal Democratic Party (LDP) leadership election scheduled on October 4, which can affect the pace of future rate hikes. Although these remain concerns, market players still expect the BoJ to continue pursuing policy normalization if economic conditions are in accordance with its predictions. USD/JPY DAILY CHART PRICE SOURCE: TradingView While that, the US Dollar finds support on hopes for a more dovish Federal Reserve policy come later this year. Fed Chair Jerome Powell’s recent words on striking a balance between inflation and jobs have further upheld guarded optimism for the USD, keeping investors on their toes for future US economic releases, such as New Home Sales, GDP, and the Personal Consumption Expenditure (PCE) Price Index. Geopolitical tensions and safe-haven requirement also contribute to containing the losses of Yen, leading to a defensive market condition in which players are expecting new economic signals coming from Japan and the United States. TECHNICAL ANALYSIS USD/JPY pair is in consolidation inside a well-known range since early August, creating a rectangle pattern that indicates the period of indecision. Near-term resistance is at the 148.00 round figure, followed closely by the 148.35–148.55 region, with the 200-day Simple Moving Average (SMA) at its midpoint. Support comes in at mid-147.00s on the downside, with additional levels at 147.00 and 146.20. Neutral daily chart oscillators imply caution, and a sustained break above resistance or below support would be required to confirm a distinct near-term trend. FORECAST If the USD/JPY currency pair is able to breach the resistance at 148.00, it may test the 148.35–148.55 region, with the 200-day SMA as a major hurdle. A prolonged breach past this can pave the way towards the 149.00 level and possibly the monthly top around 149.15, particularly if US Dollar buying demand is boosted by hawkish economic news or risk-on mood in world markets. On the negative side, a fall below the mid-147.00s would have the pair probing support at 147.20, then 147.00. A further fall below here could drive losses towards 146.20, with further extension to 145.50–145.45, which is the lowest since early July. Dovish Fed cues, safe-haven interest, or softer-than-expected US economic data are likely to trigger yen strength.