USD/JPY Analysis: Yen Weakens as Fed Dovish Bets Rise

The yen came under pressure after cautious remarks from Bank of Japan Governor Kazuo Ueda, who noted that inflation is moving toward the 2.0% target but warned that global uncertainty could hinder wage indexation. Ueda also flagged U.S. tariff hikes and signs of weakness in the U.S. labor market as risks. His tone disappointed investors, reinforcing expectations that the BoJ will avoid tightening further. His comments contrasted with Deputy Governor Shinichi Uchida, who highlighted improving business sentiment and strong corporate profits despite export headwinds.

Overall, the current upward correction looks fragile, as medium-term monetary factors still favor downside pressure on USD/JPY. Weak ADP data, showing an unexpected 32K drop in private payrolls, raised the odds of another Fed rate cut by year-end. With no fresh macro data expected due to the shutdown, dovish Fed bets may continue to weigh on the pair in the near term.

Support and Resistance Levels

The pair is back in the 148.44–146.88 sideways range (Murray [6/8]–[4/8]) and is testing its lower boundary. A break below 146.88 could open the way to 145.00 (23.6% Fibonacci retracement) and 143.75 (Murray [0/8]). On the upside, holding above 148.44 would target 150.00 (Murray [8/8]) and 151.56 (Murray [+2/8]).

Technical indicators are mixed: Bollinger Bands are flat, MACD is close to crossing into negative territory, while the Stochastic oscillator is trying to turn up from oversold levels.

Resistance levels: 148.44, 150.00, 151.56.
Support levels: 146.88, 145.00, 143.75.

Trading Scenarios and USD/JPY Forecast

Short positions can be considered below 146.88 with targets at 145.00 and 143.75, stop-loss at 148.00. Implementation horizon: 5–7 days.

Long positions can be considered above 148.44 with targets at 150.00 and 151.56, stop-loss at 147.30.