Policy backdrop. Expectations for further monetary tightening by the Bank of Japan are acting as a cap on USD/JPY. In the board’s latest “summary of opinions,” most officials flagged uncertainty around the economic impact of higher U.S. tariffs. Some economists also pointed to risks from rising consumer prices for households and floated a potential shift toward a more hawkish stance. Even so, caution still dominates inside the BoJ—especially as the Federal Reserve’s rhetoric leans toward possible cuts, which would narrow the U.S.–Japan rate differential. Given this setup, the BoJ looks positioned to “safely” lift its policy rate by at least 25 bps before year-end.
Data pulse. The case for gradual tightening is reinforced by weaker macro prints: Japan’s household spending index fell from 4.6% to –5.2% m/m in June and from 4.7% to 1.3% y/y, well below the 2.8% consensus.
Dollar tone. The U.S. Dollar Index trades around 97.80, extending last week’s pullback as markets monitor geopolitics. Attention also turns to tomorrow’s U.S. CPI at 14:30 (GMT+2), with headline expected at 2.8% and core at 3.0%, both above the Fed’s 2.0% target.
Support and resistance
On the daily chart, price is correcting within an ascending channel (approx. 151.50–144.00), edging toward the lower boundary.
- Resistance: 148.80, 151.00
- Support: 146.70, 144.00
Indicators. The Alligator’s fast EMAs remain above the signal line, while the Awesome Oscillator prints declining green bars above the zero line—slowing, but still constructive.
Trading setups
Primary scenario — SELL STOP (weekly timeframe)
- Entry: 146.70
- Take Profit: 144.00
- Stop Loss: 147.50
- Key levels: 144.00, 146.70, 148.80, 151.00
Alternative scenario — BUY STOP
- Entry: 148.80
- Take Profit: 151.00
- Stop Loss: 148.00
- Key levels: 144.00, 146.70, 148.80, 151.00