USDJPY's Recent Surge Would Create Increased Volatility

USD/JPY Surges 1.30% on Friday Amidst Jobs Report Boost

The USDJPY experienced a substantial surge of 1.30% on Friday, closing the session at 148.310, rebounding from a previous 0.31% loss on Thursday. The unexpected rise was attributed to the positive US Jobs Report, which tempered expectations of a March Fed rate cut, consequently driving demand for the US dollar.

Significance of Japanese and US Services PMIs in Shaping Short-Term USD/JPY Movements

As the week commences, the immediate path of the USD/JPY seems intricately linked to the Services PMI figures originating from Japan and the United States. Specifically, attention will be keenly focused on Monday as investors scrutinize Japan's Jibun Bank Services PMI for January, revealing a preliminary rise from 51.5 to 52.7. This increase might initiate conversations regarding a potential shift in the Bank of Japan's stance from negative rates, underscoring the pivotal role of the services sector, which constitutes over 60% of the Japanese economy.

US Economic Calendar Spotlight: ISM Non-Manufacturing PMI Holds Key to Fed Rate Cut Speculations

In the US, attention turns to the services sector, contributing over 70% to the economy, as economists project a rise in the ISM Non-Manufacturing PMI from 50.6 to 52.0 in January. A pickup in employment and prices may reduce bets on a March Fed rate cut. However, FOMC member Raphael Bostic's scheduled speech on Monday could introduce further variables, impacting market sentiment based on the recent Jobs Report and services data.

Short-term USD/JPY Forecast Hinges on Services PMIs and Central Bank Commentary

In the short term, the USDJPY's direction relies on the outcome of Services PMIs and central bank communications. A robust performance in the US services sector and hawkish statements from the Fed could favor the US dollar. Simultaneously, discussions within the Bank of Japan about a pivot from negative rates may counterbalance the diminishing expectations of a March Fed rate cut.

Technical Analysis: USD/JPY Price Action Signals Bullish Momentum

Examining the technical aspects, the USD/JPY remains well above the 50-day and 200-day EMAs, signaling a bullish trend. A breakthrough above the 148.405 resistance level would target the 150.201 resistance level. Conversely, a drop below the 148 handle may bring the 146.649 support level and the 50-day EMA into play. The daily and 4-hourly charts affirm the bullish signals, with the RSI indicating a potential return to the 149 handle before entering overbought territory.

In the Forex market, the USD/JPY's recent surge and the upcoming economic indicators create an environment of increased volatility. Traders closely watching the Services PMIs and central bank announcements may find opportunities to capitalize on potential shifts in the USD/JPY exchange rate. The market sentiment around the Fed rate cut speculations, coupled with technical analysis, adds layers of complexity for Forex and crypto traders navigating this dynamic landscape.