USD/JPY Price Forecast: Consolidates near 160.00 as US NFP takes centre stage

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The USD/JPY pair trades in a tight range around 160.00 during the European trading session on Friday. The pair wobbles as investors await the United States (US) Nonfarm Payrolls (NFP) data for May, which will be published at 12:30 GMT.

USD/JPY trades sideways at around 160.00 ahead of the US NFP data.
The US NFP data will influence market expectations for the Fed’s monetary policy outlook.
Traders doubt whether the BoJ will hike interest rates in the policy meeting on June 16.

Investors will closely monitor the employment data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

The US NFP report will likely show signs of a slowdown in job demand, with the jobless rate remaining steady. According to estimates, the US economy created 85K fresh jobs, lower than 115K in April. The Unemployment Rate is seen as steady at 4.3%.

Average Hourly Earnings, a key measure of wage growth, is seen arriving lower at 3.4% Year-on-Year (YoY) from the previous reading of 3.6%. On a monthly basis, the wage growth measure is expected to have grown at a faster pace of 0.3% against 0.2% in April.

Though the Japanese Yen (JPY) is broadly flat against the US Dollar, the former is underperforming its other peers amid uncertainty regarding whether the Bank of Japan (BoJ) will raise interest rates in the policy meeting on June 16.

USD/JPY technical analysis

USD/JPY trades almost flat around 160.00, retaining a bullish near-term bias as spot holds above the 20-day Exponential Moving Average (EMA) at 159.23. The positioning over this dynamic support suggests buyers remain in control after the recent pullback, while the 14-day Relative Strength Index (RSI) around 61 stays in positive territory, hinting that upside momentum is still constructive rather than overbought.

On the downside, initial support is seen at the 20-day EMA at 159.23; a daily close below this level would signal waning bullish pressure and open the door to a deeper correction towards the May 25 low at 158.76. Looking up, the April 30 high at 160.73 will remain the key barrier.

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

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.

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