Yen strength is further supported by the latest Bank of Japan (BoJ) policy minutes, which outlined a steady approach to reducing Japanese government bond (JGB) purchases. The BoJ will scale back quarterly bond buys to ¥400B through March 2026, then to ¥200B from April 2026, targeting a total of ¥2T by early 2027. Most policy board members advocated for this cautious pace to preserve financial market stability. The BoJ reiterated its willingness to intervene if market volatility spikes.

Japan’s economy is recovering moderately, driven by rising employment and wages, even as inflation remains stubbornly high at 3.5%—largely due to higher food prices. While inflation is projected to ease soon, risks remain around U.S. trade policy, a slowing global economy, and geopolitical uncertainty. Against this backdrop, the BoJ maintains a cautious policy stance, with future rate adjustments contingent on evolving economic data.

Technical Picture

The long-term trend remains bearish: last week, USD/JPY closed below 148.85 after losing 2.25% on Friday, setting up downside targets at 146.33 and 142.50. Should the pair consolidate back above 148.85, long positions targeting the previous high at 150.70 become relevant. The price action is clustered around EMA(21) and EMA(190), both flat, indicating an accumulation phase—a break above or below will determine the next directional move. RSI (14) sits neutral, supporting both bullish and bearish scenarios.

The medium-term trend remains bullish: late July saw a rally from 145.88–145.56 support, followed by a corrective pullback. A retest of the 144.29–143.67 zone could spark renewed buying toward 147.29 and 150.91; a break below 143.67 would signal trend reversal.

Support and Resistance Levels

  • Resistance: 148.85, 150.70, 154.80
  • Support: 146.33, 142.50, 140.25

USD/JPY is trading at 147.78, continuing a mild downtrend after the U.S. dollar

Trading Scenarios

  • Sell Limit: Entry at 148.85, Take Profit at 146.33, Stop Loss at 149.67. Time horizon: 9–12 days.
  • Buy Stop (Alternative): Entry at 149.70, Take Profit at 152.40, Stop Loss at 148.55.
  • Key Levels: 140.25, 142.50, 146.33, 148.85, 150.70, 154.80