• The Bank of Japan kept rates unchanged on Thursday.

• Japan’s ruling party lost its majority seats.

• The US dollar paused its rally before the nonfarm payrolls report.

The USD/JPY outlook has turned slightly bearish due to an absence of dovish remarks at the Bank of Japan policy meeting. At the same time, the greenback lost ground after mixed data in the previous session. Market focus has shifted to the looming NFP report and the US presidential election.

The Bank of Japan kept rates unchanged on Thursday as expected. However, market participants looked forward to more dovish remarks after Japan’s recent election. Japan’s ruling party lost its majority seats, creating uncertainty about the political landscape. Therefore, traders were pricing a more cautious tone and messaging about a delay in rate hikes. However, there was no such message, allowing the yen to strengthen.

Meanwhile, the US dollar paused its rally before the nonfarm payrolls report and the US election. Recent reports have shown a mixed picture of the economy, leaving Fed rate cut bets mostly unchanged. On Wednesday, data showed a better-than-expected increase in private employment. Private employers created an additional 233,000 jobs in October, well above forecasts of 110,000. A different report revealed that the economy expanded by 2.8% in the third quarter, below estimates of 3.0%.

Nevertheless, the labor sector has remained resilient. Therefore, there is less pressure on the Fed to lower borrowing costs. All eyes are now on the PCE price index and the nonfarm payrolls report. Economists expect slower job growth in October.

At the same time, traders are cautious ahead of the US presidential election, which might affect fiscal and monetary policy.

USD/JPY key events today

• US core PCE price index m/m
• US Employment Cost Index q/q
• US unemployment claims

USD/JPY technical outlook: Bears win battle for control at the 30-SMA

On the technical side, the USD/JPY price has broken below the 30-SMA and the 153.00 support level, indicating a bearish sentiment shift. At the same time, the RSI has fallen below 50, suggesting solid bearish momentum.

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The shift comes after the RSI made a bearish divergence, signaling fading bullish momentum. Still, bears must make lower highs and lows to confirm a new downtrend. If this happens, the price will revisit support levels, including 150.00 and 148.00.

https://www.forexcrunch.com/blog/2024/10/31/usd-jpy-outlook-yen-rebounds-after-boj-meeting/