Later in the session on Wednesday, crucial economic data, the Fed’s interest rate decision, and Fed Chair Powell’s press conference will trigger USD/JPY volatility.
Key stats include Q2 GDP and ADP employment change numbers for July. Economists forecast the US economy expanded by 2.4% quarter-on-quarter in Q2 after the first quarter’s 0.5% contraction. Additionally, economists expect ADP employment change to rise 78k in July, recovering from June’s 33k decline.
Better-than-expected numbers would signal a robust US economy and resilient labor market, supporting a less dovish Fed rate path. Conversely, softer readings may raise bets on a September Fed rate cut, weighing on US dollar demand A weaker dollar would bring the 200-day EMA into play, while a more hawkish Fed stance may send USD/JPY toward the 149.358 resistance level.
While the stats will influence dollar demand, the Fed’s interest rate decision, accompanying statement, and Powell’s press conference will be the key drivers. A hawkish hold would likely fuel US dollar demand, while support for multiple 2025 rate cuts could trigger a US dollar sell-off. A more dovish Fed rate path could push USD/JPY to the 200-day EMA and possibly test the 50-day EMA.
