USD/JPY bulls look to take control above 144.00, focus remains on key US macro data

• USD/JPY draws some buyers for the second day in a row on Tuesday.
• Fed Chairman Powell’s comments on Monday bolster the USD and provide support.
• Uncertainty over the BoJ’s rate hike path contributes to modest gains on the day.

USD/JPY is building on the good overnight rebound from the 141.65 area or a near two-week low and gaining action for the second day in a row on Tuesday. The upward move pushes spot prices past the 144.00 mark during the Asian session and is sponsored by a combination of factors.

The US dollar (USD) drew support on Monday from Federal Reserve (Fed) Chairman Jerome Powell, who forced investors to reduce their bets on another rate cut in November. The Japanese yen (JPY), on the other hand, remains on the defensive following comments by Japan’s incoming Prime Minister (PM) Shigeru Ishiba, saying the Bank of Japan’s (BoJ) monetary policy needs to remain accommodative to support a fragile situation. economic recovery.

In addition, Ishiba said on Monday that he plans to call a general election on October 27. Apart from this, the underlying bullish sentiment in global financial markets is seen undermining the demand for the safe-haven JPY and acting as a tailwind for the USD/JPY pair. JPY bulls remained on the sidelines after the BoJ Summary of Opinions from the September meeting showed that the central bank will adjust its accommodative stance if economic conditions improve.

On the economic front, Japan’s unemployment rate fell more than expected to 2.5 percent in August from 2.7 percent the previous month. In addition, a closely watched BoJ Tankan survey showed that sentiment among Japan’s major manufacturers was flat in the three months to September and a slight improvement in the mood of major non-manufacturers. This, however, does not provide any impetus for the JPY or the USD/JPY pair, supporting the outlook for future gains on the day.

Market participants are now looking at the US economic record – featuring the release of ISM Manufacturing PMI and JOLTS Job Openings data. This, along with speeches from influential FOMC members, will boost USD demand and produce short-term trading opportunities around the USD/JPY pair. Apart from this, important US macro releases scheduled for the start of a new month, including the Nonfarm Payrolls (NFP) report, should determine the next step of a directional move.