The USDJPY pair experienced a sharp decline following a softer-than-expected NFP report. This prompted the market to anticipate two rate cuts for the Federal Reserve by year-end. The market repriced 59 basis points of easing by year-end, compared to 35 basis points before the report. Commentary from Fed officials Williams and Daly has increased the likelihood of a September cut. <\/p>\n
The yen appreciated in response to the soft NFP report and dovish Fed repricing, after prior depreciation influenced by Governor Ueda’s comments. For further yen strength, weak US data or higher Japanese inflation could increase monetary policy easing expectations. On the technical side, USDJPY sold off from a key resistance zone around the 151.00 handle on the daily chart, with a target at the major trendline around the 144.50 level. <\/p>\n
The 4-hour chart shows price trading below an upward trendline, with sellers aiming for the 145.86 level. Buyers would need a price rise above the trendline to challenge resistance. On the 1-hour chart, minor resistance exists at the 148.00 handle. Upcoming US ISM Services PMI and Jobless Claims data may further influence market directions.<\/p>\n
Following the recent US jobs report, we have seen a significant shift in market sentiment against the dollar. The Non-Farm Payrolls data from last Friday, August 1st, 2025, came in at a weaker-than-expected +155,000, missing the consensus forecast of +190,000. This miss, combined with slowing annual wage growth of 3.8%, has reinforced the view that the US economy is cooling.<\/p>\n
This data has caused a dramatic repricing in interest rate futures, with the market now pricing in a high probability of two Federal Reserve rate cuts by the end of this year. We can see that the chances of a rate cut at the September Fed meeting have jumped to over 80%, according to CME FedWatch Tool data. This is a stark change from just a week ago when the odds were closer to a coin flip.<\/p>\n
On the US inflation front, the latest CPI report for July 2025 showed headline inflation easing to 2.8% year-over-year, giving the Fed more room to act. With inflation trending down and the labor market softening, we expect Fed Chair Powell may use the upcoming Jackson Hole Symposium in late August to signal a definitive dovish pivot. All eyes will be on his speech for confirmation of a September cut.<\/p>\n
From the Japanese side, recent data is adding another layer to the trade. Japan\u2019s national Consumer Price Index for July 2025 edged up to 2.7%, slightly above forecasts and keeping pressure on the Bank of Japan. While Governor Ueda has remained dovish, persistent inflation could force the BoJ to consider a more hawkish policy stance later in the year.<\/p>\n
Given the strong downward momentum, derivative traders should consider strategies that benefit from a further decline in USD\/JPY. Buying put options with strike prices near the 145.00 level could be an effective way to target the major trendline support around 144.50. This provides a clear target for the current bearish move.<\/p>\n
For those anticipating a short-term bounce before another leg down, selling call spreads with a ceiling around the 148.00 resistance level could offer a defined-risk trade. This strategy would capitalize on the expectation that any rallies will be limited as sellers are likely to re-emerge at higher levels. This week’s US ISM Services PMI and Jobless Claims figures will be critical to watch for any change in this outlook.<\/p>\n
Looking back, this rapid shift feels similar to the Fed’s policy pivot we witnessed in 2019, where a quick change in guidance led to a sustained period of dollar weakness. We should also remember the Ministry of Finance’s currency intervention back in 2022 when USD\/JPY last traded above 151. This suggests there is a strong political will to prevent excessive yen weakness, adding weight to the current resistance level.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USDJPY drops after soft NFP report; Fed rate cuts anticipated; yen strengthens amid dovish repricing.<\/p>\n","protected":false},"author":62,"featured_media":17044,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28216","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/28216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=28216"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/28216\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17044"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=28216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=28216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=28216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}