USD/JPY poised to test 158.00 despite weak US jobs data

• USD/JPY climbs even though US payrolls dropped in February.
• Unemployment rises to 4.4%, lifting odds of a Fed rate cut to 50%.
• BoJ warns Yen volatility could impact inflation and monetary policy outlook.

The USD/JPY rises and challenges the 158.00 figure on Friday up over 0.20% after the latest employment report in the US revealed weakness in the labor market. Also, the Middle East conflict deteriorates market mood, maintaining the US Dollar bid during the week.

US Dollar holds firm on risk aversion even as NFP miss boosts Fed cut bets

February’s Nonfarm Payrolls print was worse than expected as the US economy slashed 92K jobs in the month missing estimates of for a creation of 59K jobs. At the same time, the Unemployment Rate rose from 4.3% to 4.4% a tenth below the Federal Reserve’s 4.5% projected for 2026, with the data increasing the chances for a rate cut in the foreseeable future.

Money markets saw the odds for a 25-basis points Fed rate cut, rising from around 35% ahead to the data to 50%, according to Prime Market Terminal.

Mary Daly, the San Francisco Fed President said that both of the goals are risks now, said that no one month of data is decisional, yet revealed that the labor market is vulnerable. Nevertheless, she added that although she is concerned, strikes, snow and population benchmarking make the NFP report harder to interpret.

Daly favors holding rates steady “while we collect more information,” regarding the jobs market and inflation.

At the same time, US Retail Sales contracted -0.2% MoM better than the expected -0.3% fall

In Japan, the Bank of Japan Deputy Governor Ryozo Himino commented that the central bank is vigilant of Japanese Yen moves as it could affect core inflation. He said at the parliament that “We need to be mindful that exchange-rate fluctuation has a bigger impact on price moves than in the past. Through this channel, they could affect inflation expectations and underlying inflation.”

USD/JPY Price Forecast: Technical outlook

In the daily chart, USD/JPY trades at 157.73. The near-term bias is bullish as spot holds well above the rising support trend line from 152.10 and rides a sequence of higher daily lows. Price action trades above the clustered simple moving averages around 156.10, confirming an upside trend backdrop, while the break of the prior descending resistance line from 159.23 has shifted former capping pressure into a more supportive configuration. The RSI at 61 signals firm bullish momentum without entering overbought territory, reinforcing the view that buyers retain control in the near term.

Initial support emerges at the 156.10 moving average area, ahead of the broken resistance trend-line region near 154.70, where a deeper pullback would test the integrity of the latest breakout. Below that, the higher rising trend line from 152.10 forms a more distant but important structural floor. On the upside, immediate resistance sits near the recent highs around 157.70, with a sustained break opening the way toward the 159.20 region as the next bullish target. As long as price holds above 156.10 on a daily closing basis, the path of least resistance remains to the upside.

(The technical analysis of this story was written with the help of an AI tool.)