USD/JPY rebounds above 152.00 amid holiday market lull

• USD/JPY bounced back above 152.00 after a sharp downturn late last week.
• Early week data remains limited, trapping investors in a trade headline worry circle.
• More US inflation data is due later this week, keeping Fed expectations near the front.

USD/JPY clawed its way back above the 152.00 handle on Monday, paring away some of last Friday's steep tariff-headline-fueled losses. The Dollar-Yen pairing remains bolstered into near-term bullish territory, but a rapid re-escalation of trade war rhetoric between the US and China has knocked US Dollar (USD) markets for a loop.

The trading week opens on a slow note, with US markets dark for the Columbus Day holiday and little of note on the economic calendar outside a smattering of appearances from Federal Reserve (Fed) policymakers. However, Fedspeak is unlikely to mean much at this stage: Markets remain confident that the Fed is firmly on pace to deliver two more quarter-point interest rate cuts before the end of the year, and the majority of Fed speeches have tilted into confirming that assessment.

The US government shutdown continues to simmer away on the back burner, throwing off the release schedule for official datasets. US Producer Price Index (PPI) business-level inflation data is dubiously slated for Thursday, but with the Bureau of Labor Statistics (BLS) mired in the federal funding dryout, critical data releases have been delayed or suspended for the time being.

USD/JPY forecast

USD/JPY extended its rally last week, pushing toward 152.00 after clearing a prolonged consolidation above the 148.00 area. The pair broke cleanly above both the 50-day and 200-day EMAs, confirming a shift in momentum toward the upside. The recent pullback looks more like a pause than a reversal, with buyers defending support near 151.00 after last week's sharp advance.

Momentum remains stretched, with the stochastic oscillator still holding in overbought territory. That suggests short-term exhaustion could lead to some sideways movement before another push higher. As long as price holds above the 150.50-151.00 region, the broader structure favors continuation toward the 153.00 zone. A daily close back below the moving averages, however, would raise the risk of a deeper retracement.

USD/JPY daily chart