Later Friday, consumer sentiment will influence the Fed’s policy stance and appetite for the US dollar. Economists forecast the Michigan Consumer Sentiment Index to fall slightly from 58.2 in August to 58 in September.
A larger-than-expected drop in sentiment could indicate a pullback in consumer spending, dampening inflation. Additionally, weaker spending could cool the US economy, given that private consumption accounts for around 67% of the US GDP. A softer inflation and slower economic outlook could boost bets on multiple Fed rate cuts, sending USD/JPY toward 145.
Conversely, stronger sentiment and an improving economic backdrop may reduce bets on multiple rate cuts in the final quarter. A less dovish Fed policy stance may send USD/JPY toward 150.
USD/JPY Scenarios: Hawkish BoJ vs. Dovish Fed Risks
Bearish USD/JPY Scenario: Hawkish BoJ signals, strong Japanese data, weaker US consumer sentiment, or dovish Fed signals. These scenarios could push USD/JPY toward 145.
Bullish USD/JPY Scenario: Dovish BoJ rhetoric, weaker Japanese data, or hawkish Fed cues could drive the pair toward 150.
