The USDJPY pair is stuck in a holding pattern near multi-month highs at 161.76 on June 25, with market players caught in two minds. The main factor capping further gains is cooling American inflation expectations, driven by falling oil prices after the temporary US-Iran ceasefire. This has forced traders to scale back their aggressive Federal Reserve (Fed) hike bets, prompting a wave of moderate profit-taking in the greenback.
On the Bank of Japan (BoJ) front, the rhetoric is getting sharper. Governor Naoki Tamura has left little doubt that interest rate increases every few months are on the table to push borrowing costs toward a neutral 2%. What's more, the June meeting minutes show that some policymakers are eager to accelerate normalization, as price pressures from a weak yen refuse to fade. Sure, the gap between Japanese (1%) and US (3.50%–3.75%) rates is still wide, though even whispers of faster BoJ action are chipping away at the carry trade's appeal and raising the stakes for a reversal.
And then there is the intervention sword hanging over the market. Finance Minister Katayama and currency diplomat Mimura have been crystal clear: they won't hesitate to step in if the yen weakens too far. To make matters worse for the bulls, recent talks with US Treasury Secretary Bessent have only made speculators more jittery. With short yen positions still piling up at around 150,000 contracts, the threat of a sudden move by Tokyo is keeping buyers from making a serious run at 162.00.
Turning to the charts, USDJPY is hovering near seven-month highs. But the momentum is visibly flagging: trading volumes have dried up in recent sessions, and a bearish divergence is emerging between the rising price and the declining Chaikin Oscillator—a clear warning that buying pressure is leaking out, even as the pair clings to elevated levels.
Ready to take a position? Here's the plan:
Sell USDJPY from 161.70. Place Take Profit at 159.80. Set Stop Loss at 162.30.
This forecast is valid from June 25 till July 2, 2026.
This content is for informational purposes only and is not intended to be investing advice.
