Tariff Uncertainty Caps Dollar Strength
Investors remain fixated on the evolving US trade stance. After the White House postponed the implementation of higher tariffs from July 9 to August 1, attention has shifted to new rounds of notification letters sent to major partners. Japan’s Prime Minister Shigeru Ishiba and South Korea’s President Lee Jae-myung have already received official communication from the US administration: starting August, a 25% duty will apply to all Japanese and Korean goods. There is an added risk of further escalation if either country retaliates.
Economic Headwinds for Japan
Fresh US tariffs pose a direct threat to Japan’s export-driven industrial sector. Former Bank of Japan board member Makoto Sakurai, in a widely cited forex forecast, expects the central bank to pause its current tightening cycle until at least March 2025. The BoJ, he suggests, will need time to assess the full impact of new trade taxes on the domestic economy. According to Sakurai, upcoming focal points include the October Tankan business sentiment survey and wage negotiations for 2025. The next BoJ meeting, scheduled for July 31, will see a policy rate decision alongside updated quarterly projections.
Today’s macroeconomic data had little impact on USD/JPY volatility. Producer Price Index (PPI) inflation slowed as expected, dropping to 2.9% YoY in June (down from 3.3%), with a 0.2% monthly decline, in line with forex analyst projections.
Technical Analysis & Forecast
On the daily chart, Bollinger Bands are relatively flat, though the upper band is widening following recent bullish momentum. MACD holds a buy signal above its signal line, while Stochastic oscillates sideways above 80, suggesting the dollar is in overbought territory in the short term.
- Resistance: 147.17, 148.00, 148.64, 149.09
- Support: 146.00, 145.00, 144.00, 143.00
Trade Ideas & Scenarios
- Sell Stop: Entry at 145.00, TP 144.00, SL 145.50 (2–3 days horizon).
- Buy Stop: Entry at 147.20, TP 148.64, SL 146.60.
Top Forex Analyst Opinions
Leading forex analysts at ING and Nomura continue to highlight the downside risks for the yen, emphasizing that an extended US-Japan tariff dispute could further dampen the JPY outlook. According to DailyFX, near-term USD/JPY momentum may slow as traders assess both trade headlines and the potential for BoJ intervention should yen depreciation accelerate.
Forex forecast: The consensus across top platforms is that USD/JPY will trade range-bound between 144.00 and 148.00 until the full impact of US tariffs and the BoJ’s next policy meeting are priced in. Breaks above 148.00 would be seen as bullish extensions, while a drop below 145.00 opens the door for deeper corrections toward 144.00 or even 143.00 in the medium term.