Policy outlook and market sentiment
Most economists surveyed by Reuters expect the Bank of Japan to hike rates again this year, likely by 25 basis points toward year-end. This is a higher probability than just a couple of weeks ago. Still, BoJ officials remain cautious, as Washington’s trade policy could put pressure on Japan’s fragile recovery, making the timing of the next move uncertain.
On the dollar side, the USDX is holding around 98.10. Traders are watching the Fed closely, especially as political pressure mounts. President Donald Trump has called for the dismissal of Fed Governor Lisa Cook, accusing her of restricting mortgage lending to Republican states. Analysts see this more as a political maneuver, as Trump seeks allies on the Board before Jerome Powell’s term ends. Meanwhile, the latest FOMC minutes showed that only two members supported a rate cut in July, underlining the Fed’s hawkish stance — something the White House is clearly unhappy with.
Technical picture
On the daily chart, USD/JPY continues to move within its long-term upward channel (151.50–144.30), testing lower boundaries. Indicators are softening: the Alligator EMA lines are converging toward the signal line, while the AO histogram prints fresh red bars above the zero line, pointing to weakening bullish momentum.
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Support levels: 146.30, 142.40
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Resistance levels: 148.40, 151.00
Trading setups
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Base scenario: A break below 146.30 opens the way to 142.40. Stop-loss at 148.00. Time horizon: one week or more.
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Alternative scenario: If buyers push above 148.40, the pair could extend gains toward 151.00. Stop-loss at 147.00.