The appointment of a new prime minister next month could give the Bank of Japan reason to delay any imminent monetary tightening, especially if the incoming leader adopts a dovish stance. According to research from Evercore Inc., following Shigeru Ishiba’s resignation and the leadership contest within the ruling Liberal Democratic Party, the central bank may push its next rate hike from October to January. Meanwhile, Japan’s Q2 GDP grew from 0.2% to 0.5%. Household spending in July rose to 305,694 yen, up 5.1% in nominal terms and 1.4% in real terms, while incomes reached 1,283,000 yen, marking changes of +1.0% nominally and –2.5% in real terms. This suggests the slow recovery trend has continued since the start of the year.

The U.S. dollar index (USDX) holds near 97.70 as investors monitor Federal Reserve commentary on monetary policy. Odds of a 50-basis-point cut have eased after revised labor market data showed a downward adjustment of –911,000 jobs versus earlier projections of –598,000. On Thursday at 14:30 (GMT+2), U.S. CPI data will be released, after which the Fed may finalize its decision on borrowing costs.

Support and USD/JPY forecast

On the daily chart, the pair is attempting to approach the support line of the ascending channel with dynamic boundaries at 152.50–145.00.

Technical indicators are weakening the buy signal, nearly flipping to bearish: fast EMAs on the Alligator indicator are converging toward the signal line, while the Awesome Oscillator (AO) prints corrective bars in negative territory.

  • Resistance levels: 148.50, 151.00

  • Support levels: 146.30, 142.60

Trading Scenarios

  • Sell Stop: Short positions may be opened after a breakdown below 146.30 with a target at 142.60. Stop-loss at 148.00. Implementation: 7 days or more.

  • Buy Stop: Long positions may be considered after a breakout above 148.50 with a target at 151.00. Stop-loss at 147.30.

USD/JPY

Scenario

  • Timeframe: Weekly

  • Recommendation: SELL STOP

  • Entry Point: 146.30

  • Take Profit: 142.60

  • Stop Loss: 148.00

  • Key Levels: 142.60, 146.30, 148.50, 151.00

Alternative Scenario

  • Recommendation: BUY STOP

  • Entry Point: 148.50

  • Take Profit: 151.00

  • Stop Loss: 147.30

  • Key Levels: 142.60, 146.30, 148.50, 151.00