USD/JPY Climbs Near 148.40 as Dollar Finds Its Footing

The USD/JPY pair is pushing higher toward 148.40 during European trading hours Thursday. I'm watching the greenback gain some traction after Wednesday's pullback. Right now, the US Dollar Index hovers around 98.20, stabilizing after yesterday's losses.

Yesterday's dollar weakness came after those disappointing JOLTS figures - only 7.18 million job openings in July versus the expected 7.4 million. This soft data has traders like me practically convinced the Fed will cut rates this month. Looking at the CME FedWatch tool, odds for a September cut jumped to 97.6% from 92% before the jobs data hit.

Fed officials are clearly worried about the job market, especially with Trump's tariffs creating uncertainty. Christopher Waller was just talking about this yesterday - warning about slowing labor demand while making it obvious rate cuts are coming.

For today's session, I'm keeping my eyes on the US ADP Employment Change and ISM Service PMI data. These numbers could really shake things up. Consensus expects only 65K new private jobs in the ADP report, down sharply from last month's 104K. If we get another weak print, it'll just reinforce what we already suspect - the US labor market is cooling fast.

Meanwhile, Japan's releasing household spending data tomorrow, which could show annualized growth of 2.3% - better than the previous 1.3%. But honestly, I'm skeptical these Japanese consumption numbers will have much impact given how focused markets are on Fed policy right now.

I find it ridiculous how Wall Street keeps hanging on every economic data point to confirm what the Fed has practically already decided. The job market is clearly weakening, yet some traders still want more evidence before fully committing to dovish bets. Sometimes I wonder if traders just enjoy the suspense more than actually making money.

The yen remains surprisingly weak despite all this Fed cut talk. You'd think Japan's currency would strengthen against a dollar that's about to lose its yield advantage, but markets never quite behave the way textbooks suggest they should.

Bottom line - dollar strength against yen today is likely temporary, and tomorrow's big NFP report will probably determine if we break higher or resume the downtrend.