Selling USDJPY from upper limit of descending triangle

Most banks’ consensus forecast suggests a gradual decline in the USDJPY currency pair from its current highs over the next six months, indicating an expected weakening of the dollar against the yen.

A key underlying factor is the growing monetary policy divergence between the US Federal Reserve (Fed) and the Bank of Japan (BoJ). The first regulator is expected to begin or continue its rate-cutting cycle by mid-2026, thereby supporting the national economy and pressuring the greenback. Japanese officials, in turn, are poised to gradually normalize monetary conditions in the country. Their actions should underpin the yen. Crucially, the Fed is highly unlikely to tighten its policy, just as the BoJ does not plan to reduce its borrowing costs. The monetary divergence between the two central banks is considered strong and long-term, making a reversal of this scenario unlikely under current circumstances.

Several major firms predict the pair’s significant drop by next June. For instance, UBS analysts anticipate the rate will fall to 136 JPY per USD in six months, while Exchange Rates UK Research forecasts a level of 141.81.

From a technical perspective, a descending triangle has formed on the daily USDJPY chart (as well as on higher timeframes). Quotes have recently touched the pattern’s upper boundary, indicating a potential pullback.

The ultimate recommendation is to sell USDJPY. Lock in profits at the level of 140.00. Place Stop Loss at 160.00.

Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.