Important events today:

12:30 UTC: USD – Non-Farm Employment Change.

The USD/JPY pair is trading around 149.40 during the Asian session on Friday after rebounding from a four-month low of 148.50 recorded on Thursday. The rise in the USD/JPY pair may be attributed to the strengthening of the US dollar (USD), which could be related to increased risk-off sentiment following recent data on industrial production and employment, raising concerns about the state of the US economy.

The US dollar (USD) is supported as markets are in a fragile balance. However, the economic downturn intensifies expectations of a rate cut by the Federal Reserve. The CME FedWatch tool shows that traders are fully pricing in a 25 basis point rate cut on September 18. Additionally, traders are awaiting the release of US non-farm employment data and average hourly earnings for July, which are due to be published later during the North American session.

The US ISM Manufacturing PMI fell to an eight-month low of 46.8 in July, compared to the previous value of 48.5 and a forecast increase to 48.8. The number of initial jobless claims in the US for the week ending July 26 rose to 249,000 from 235,000 the previous week, exceeding the forecast of an increase to 236,000.

The Japanese yen (JPY) received support after the Bank of Japan (BoJ) decided to raise the benchmark interest rate to a 16-year high of 0.25%. This move, along with the Bank of Japan’s statement about the possibility of further rate hikes if required by the economy, could lead to an appreciation of the yen. Market expectations now account for two additional rate hikes by the end of the fiscal year in March 2025, with the next hike expected in December. Such a forecast could limit the upside potential of the USD/JPY pair.

Recommendations: Primarily trade with Sell orders from the current price levels.