Selling USDJPY with 145 target amid growing expectations of BOJ rate hike

The USDJPY pair started the day at 146.669 but it soon dropped to 146.455 after Scott Bessent made critical remarks about the Bank of Japan's (BOJ) policies. On August 14, he said that interest rates in the Asian country need to go up, leading the market to believe that monetary policy will tighten in the coming months, thus strengthening national currency.

Further support for the yen comes from the growing likelihood of a Federal Reserve rate cut in September, which would widen the divergence between US and Japanese monetary policy. Bessent also posited the hypothesis that the Fed might be required to lower borrowing costs by 150–175 basis points, while the BOJ could tighten its monetary conditions. This development has already exerted pressure on USDJPY. 

However, political uncertainty in Japan, including the loss of the ruling coalition's parliamentary majority, weakens the credibility of fiscal policy. Combined with potential risks to corporate earnings from US tariffs, these factors may limit the yen's upside potential.

The pair's near-term direction hinges on Japan's Q2 GDP figures, which are due Thursday. Strong economic growth could prompt the BOJ to tighten policy faster, potentially driving USDJPY toward 144–145.

Technically, USDJPY shows clear bearish signals. Prices are now trading below both the EMA(20) and EMA(50), and these moving averages are flattening. The %K line of the Stochastic Oscillator has crossed below the %D line, indicating classic downward momentum. Meanwhile, declining On-Balance Volume (OBV) reflects weakening buying interest and growing seller dominance. All these factors add up to suggest that the market might continue to drop, with initial support at 146. A break below this level would expose 145 as the next target. 

The following trading strategy may come into play:

Sell USDJPY with Take Profit at 145 and Stop Loss at 147.5. 

This forecast is relevant from August 14 to August 21, 2025.