Selling USDJPY as dollar gets less support

The USDJPY currency pair climbed higher during Thursday’s early trading, but this advance could face fundamental challenges. Yesterday’s comments from Federal Reserve (Fed) Chair Jerome Powell were less dovish than expected, providing temporary support for the dollar. The official hinted that a rate cut in December remains an open question. However, this driver seems to be short-lived, given long-term risks for the pair.

A key negative factor for USDJPY is the current situation in Japan. The country’s central bank keeps tightening its monetary policy. Although interest rates remained unchanged at the October 30 meeting, two board members advocated for an increase. This indicates growing domestic pressure for policy normalization. Bank of Japan (BoJ) Governor Kazuo Ueda has recently stated his willingness to raise rates if inflation and wage forecasts improve. While the Fed continues to ease policy, despite a possible pause in December, the Bank of Japan is moving in the opposite direction, putting USDJPY under pressure due to the narrowing monetary divergence between the two economies.

Fundamental factors no longer underpin the American currency. Optimism about a potential trade deal between the US and China has already been priced in by traders. Moreover, expectations of large-scale budget stimulus in Japan, which had previously weighed on the yen, may be revised downward, easing pressure on the bond market and ultimately supporting the national currency.

As for the technical picture, a bullish trend has indeed been established following a recent correction. The price is rising, with the RSI moving upward from the neutral zone, generating bullish momentum, and the Chaikin Oscillator remaining in positive territory with increased buyer activity. Nevertheless, the pair’s current movement is facing resistance near the previous local high set on October 27, limiting USDJPY’s growth potential in the short term.

Take a look at the following trading plan:

Sell USDJPY as it approaches the 153.300 resistance level. Place Take profit at 150.860 and Stop loss at 154.00.

This forecast remains relevant between October 30 and November 6, 2025.