ANZ analysts forecast that USD/JPY is more inclined to reach the 150 level rather than descending to 140 in the upcoming month. While the weaker employment data may initially provide some relief to the JPY, the longer-term trajectory leans towards a stronger USD. ANZ suggests that if the Federal Reserve opts to maintain elevated interest rates, short-end U.S. yields could surpass the 5% mark, pushing USD/JPY to 150.

Key Points:

• Short-Term Relief for JPY: Softer U.S. employment data and yields could offer temporary respite to the JPY.

• Long-Term Direction: The 1-month outlook for USD/JPY leans more towards an upward direction, targeting 150 rather than a decline to 140.

• Federal Reserve Decision: If the Fed keeps interest rates high, short-end U.S. yields could return to above 5%, further boosting USD/JPY to 150.

Implications:

For Traders and Investors:

• Short-term: The JPY may experience a brief respite owing to softer U.S. employment data and yields.

• Medium-term: The 1-month outlook leans towards a stronger USD against the JPY. Positioning for a move towards 150 in USD/JPY may be advisable.

Conclusion:

While temporary relief may come to the JPY following softer U.S. employment data, the medium-term outlook is more bullish on USD/JPY. If the Federal Reserve decides to maintain higher rates, the pair could aim for the 150 mark in the next month, providing a more likely trajectory compared to a fall to 140. This makes a bullish outlook on USD/JPY a plausible strategy for traders in the coming weeks.