FX.co ★ USD/JPY

USDJPY 4-H Time Frame Update Given the political unpredictability surrounding the Bank of Japan's interest rate decision, this week could be crucial for the USD/JPY. The BoJ increased interest rates in July 2024 and January 2025 after leaving negative rates in March 2024. The July 2024 ruling turned out to be crucial. A yen carry trade unwind was caused by the BoJ's reduction in JGB purchases and rate hike. Further tightening was suspended until January 2025 due to the inconvenience. The markets were taken by surprise when BoJ Governor Ueda and officials showed no prior indication of willingness to raise rates, which caused the USD/JPY to plummet to a low of 139.576 in September 2024. Notably, in order to defend the policy choice, BoJ Governor Kazuo Ueda had to appear at a special legislative session in August. As we move forward to August 2025, new guidance suggests that September 19 will probably be held. Governor Ueda has hinted that rises are still feasible if the economy permits. Regarding the bank's rate trajectory through the fourth quarter, however, uncertainty has increased. BoJ discourse that is hawkish or weaker Data from the US manufacturing sector may cause the USD/JPY to move toward 146.5. Stronger US data or dovish BoJ talk might push the pair closer to 149.358. A more dovish Fed policy stance would be supported by rising recession concerns, which might cause the USD/JPY to move closer to the 50-day Exponential Moving Average (EMA). The next critical support level would be 146.5 if it were breached. On the other hand, a higher reading might reduce anticipation of several rate reductions throughout the fourth quarter. The USD/JPY could move toward the 200-day EMA if the Fed adopts a less dovish policy stance. The resistance level of 149.358 would come into play if there was a persistent move through the 200-day EMA.