USD/JPY Outlook: Yen Retreats From 2-Month Top After US GDP

The USD/JPY outlook is slightly bullish, with the yen retreating from a 2-month high. This shift comes
as the dollar strengthens on the back of upbeat GDP data, indicating a robust economic landscape. At the same time, investors look forward to next week’s Bank of Japan policy meeting.The yen has gained 2.4% this week amid an increase in BoJ rate hike expectations. When the week began, investors were pricing a 40% chance of a 10bps cut next week. However, the likelihood has risen to 67.2% as the week winds down. Notably, there is more pressure on Japan’s central bank to hike rates as a weak yen hurts the economy. Furthermore, the BoJ might announce plans to reduce bond purchases. A rate hike and reduced economic stimulus could lead to a rally in the yen. Investors are also optimistic that the Fed will start cutting rates soon, reducing the rate gap between Japan and the US. Meanwhile, after upbeat US data, the US dollar extended gains made on Thursday. Notably, the US economy expanded by 2.8% in the second quarter, beating forecasts of 2.0%. The report had little impact on expectations for a September Fed cut as inflation eased despite resilient demand.Moreover, US jobless claims fell to 235,000 last week, missing forecasts for 238,000, indicating a still-tight labor market. These reports could keep policymakers cautious at next week’s policy meeting. Investors are eagerly awaiting the core PCE price index that will give more clues on what the Fed might do in September. USD/JPY key events today

 USD/JPY technical outlook: Price climbs after Morning Star candlestick pattern USD/JPY 4-hour chart On the technical side, the USD/JPY price is bouncing higher after finding support at the 152.01 key level. However, the bearish trend remains intact since the price is below the 30-SMA. At the same time, the RSI is in bearish territory. Still, there are signs bulls might be ready to take charge. Notably, the price has formed a Morning Star candlestick pattern, indicating a possible bullish reversal. The price must break above the 30-SMA and 156.02 resistance to confirm this bullish signal.More By This Author:EUR/USD Forecast: Bears Intensify After Downbeat EU PMIUSD/CAD Outlook: Posts 3-Month Top Following 2nd BoC Rate CutAUD/USD Price Analysis: Sliding After PBOC Rate Cut Surprise