Later Friday, the highly anticipated Personal Income and Outlays report could influence expectations of an October Fed rate cut. Economists forecast the Core PCE Price Index to rise 2.9% year-on-year in August, matching the previous month’s increase.
A higher-than-expected reading could dampen rate cut expectations, sending USD/JPY toward the the August 1 high of 150.917.
Conversely, a softer inflation print could fuel speculation about Fed rate cuts in October and December, pushing the pair toward the 149.358 support level. If breached, the 200-day EMA would be the next key technical support level.
Beyond the data, traders should consider commentary from FOMC members.
USD/JPY Scenarios: Hawkish BoJ vs. Dovish Fed Risks
Bearish USD/JPY Scenario: Hawkish BoJ cues, softer US inflation, or dovish Fed rhetoric could drag USD/JPY toward 147.5.
Bullish USD/JPY Scenario: Dovish BoJ signals, hotter US inflation, or hawkish Fed cues could send the pair toward 150.917.
