The USDJPY currency pair reached its highest level since early April during Wednesday’s trading session, surpassing 149.5. At the same time, quotes approached a strong resistance zone: the 150 level, alongside the nearby 200-day moving average. As a result, the price failed to extend its upward momentum, and a shift toward a correction is seen today. The first potential pullback target is 148, followed by 146.5.
The Stochastic indicator also points to a short-term weakening of the US dollar against the yen. One of its lines has already entered overbought territory, and a full sell signal may emerge anytime soon. Notably, the anticipated downward movement does not contradict the recently established USDJPY recovery trend observed during the past few months. The 100-day moving average has stabilized, preparing to reverse upwards. When it approaches this level, traders should consider closing short positions.
Meanwhile, Forex market participants keep analyzing the results of the latest Federal Reserve meeting. Fed Chairman Jerome Powell gave no hints about a possible interest rate cut in September, disappointing dollar sellers. Nevertheless, for the first time in over 30 years, two members of the US central bank dissented, voting in favor of immediate monetary policy easing. This suggests that Donald Trump’s pressure may be having an effect, and more officials could join Christopher Waller and Michelle Bowman in September.
In contrast, the Bank of Japan (BoJ) showed far greater unanimity, with nine members voting today to keep the key rate unchanged at 0.5%. At the same time, the central bank raised its inflation forecast (from 2.2% to 2.7%) and GDP growth projections (from 0.4-0.6% to 0.5-0.7%) for this year. The recently signed US-Japan trade deal has mitigated some economic risks, allowing the Asian central bank to refocus on combating excessive price growth. Analysts surveyed by Reuters and Bloomberg now expect the next BoJ rate hike no later than the end of 2025.
Consider the following trading strategy:
Sell USDJPY at the current price. Take profit 1: 148. Take profit 2: 146.5. Stop loss: 150.
This content is for informational purposes only and is not intended to be investing advice.
