Japan Shows Hawkish Signals, US Dollar Faces New Pressure
The Bank of Japan (BoJ) maintained its interest rate at 0.5%, while shifting its policy tone to a more optimistic one following the US-Japan trade deal. Japan's core inflation was revised up from 2.2% to 2.7% for the 2025/26 fiscal year.
BoJ Governor Kazuo Ueda hinted at the possibility of a rate hike by the end of 2025, although the decision remains dependent on developments in inflation and consumption data.
Expectations for a rate cut in the US increased following weak employment data and speculation that the Fed will cut rates next month. This pressured the US dollar index and gave the yen room to strengthen.
The difference in US and Japanese bond yields remains a key driver. Due to high US yields while the BoJ remains relatively dovish, USD/JPY remains supported by the stronger dollar.
The weakening US dollar sentiment and the potential for a hawkish BoJ stance provide strengthening momentum for the yen, so USD/JPY has the potential for a correction or even a flattening.
Long-term, USD/JPY remains in an uptrend until 2025. The next major resistance is around 156.97–161.81; the highest support is at 145.84, then it drops to 139.73 and 136.72.
For intraday trading, watch support at 145.84. A close below it could open a short opportunity towards 142.66. Conversely, a break above 150.90 could provide long momentum towards 151.22.
Source: Newsmaker.id
