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Currencies USD/JPY

Japanese Yen Recover From One-Week Low Against USD, But Gains Capped Despite Mixed Signs

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  • July 28, 2025
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Japanese Yen (JPY) recovered mildly from a one-week low against the US Dollar (USD) at the beginning of the new week following a recent trade agreement between Japan and the US that suggests a possible Bank of Japan (BoJ) interest rate hike later this year. Yet the JPY’s upside seems limited with the softening of inflation in Tokyo, increased domestic political risk, and a general risk-on market mood due to better global trade sentiment. In the meantime, investors tread carefully before crucial central bank decisions from the Fed and BoJ, as well as high-impact US economic releases, all of which could heavily impact the USD/JPY pair’s next major move. KEY LOOKOUTS • Traders wait for this week’s announcements by the Bank of Japan and US Federal Reserve policy for guidance on upcoming interest rate moves, which should significantly impact the USD/JPY cross. • This week’s major US releases such as Q2 GDP, PCE Price Index, and Nonfarm Payrolls might lead to USD/JPY volatility. • Heightening domestic political uncertainty after the recent election loss of the ruling coalition might hold back any tightening action by the BoJ, softening the JPY. • Break above 148.65 might extend to the 149.00 level, while below 147.00 and support thereabouts may provide buying opportunities for the traders. The Japanese Yen began the week with a gentle correction from its recent one-week low versus the US Dollar, underpinned partly by optimism over a trade agreement between Japan and the US, reviving speculation about a possible Bank of Japan rate increase later this year. Nevertheless, the currency’s upside is capped on mixed fundamentals such as weakening inflation in Tokyo, domestic political uncertainty, and better global risk appetite that is shrinking safe-haven demand. Traders are walking on eggshells in anticipation of pivotal central bank decisions from both the Federal Reserve and the BoJ, as well as the all-important US economic data releases, all of which are likely to figure in the next major move for the USD/JPY currency pair. Japanese Yen creeps up from one-week low against the US Dollar but is capped on upside by mixed economic cues and risk-on sentiment in the market. Market participants are cautious ahead of this week’s big central bank announcements and top US data releases. • JPY recovers modestly from one-week low against the USD, buoyed by expectations of a possible BoJ rate increase later in the year. • Mildly subdued USD price movement and Japan’s US trade agreement are among the factors helping the Yen recover intra-day. • Risk-on sentiment fueled by US–EU as well as US–China trade optimism caps safe-haven demand for the Yen. • Softening Tokyo inflation and Japanese political turbulence function as headwinds for JPY strength. • USD/JPY above 148.00, technicals hinting at a potential retest of 148.65–149.00 levels. • Critical support levels are at 147.65, 147.00, and 146.55, with the risk of further losses limited near 145.00. • Traders wait for updates from Fed and BoJ policy and US GDP, PCE, and NFP data to lead future direction. The Japanese Yen started the week on an upbeat note with moderate gains as market mood improved on news of a recent trade pact between Japan and the United States. This transaction revived hopes of the Bank of Japan resuming policy tightening during the latter half of this year, providing some support to the currency. However, more general market conditions are unclear, with investors weighing hope regarding global trade developments against domestic issues within Japan. Specifically, political uncertainty following a severe election setback for the ruling coalition has created skepticism regarding BoJ policy flexibility over the near term. USD/JPY DAILY PRICE CHART SOURCE: TradingView In contrast, the US Dollar approaches the week with a note of caution as the market waits for several high-impact events. Optimism surrounding the resumption of US–China talks and advancement in US–EU trade negotiations has pushed risk appetite higher, while the demand for safe-haven assets such as the Yen has fallen. Investors are in a wait-and-watch mode, waiting for significant policy announcements by the Federal Reserve and Bank of Japan, as well as a series of significant US economic data announcements that are likely to determine the direction in which the market is headed next. TECHNICAL ANALYSIS USD/JPY currency pair indicates a bullish inclination, breaking above the 200-hour Simple Moving Average (SMA) and holding on to gains beyond the 148.00 level. Bullish momentum indicators on both daily and hourly charts favor further upside potential, with the next significant resistance at the 148.65 zone, last week’s high. A clean break above this could provide the way to challenge the psychological 149.00 level. On the negative side, nearest support is around the 147.70–147.65 area, which is supported by the 100-hour SMA and the 23.6% Fibonacci retracement level, with further support around 147.00 and the 146.55 area. FORECAST If bullish pressure persists, the USD/JPY currency pair may experience further gains, particularly if the Federal Reserve remains hawkish in its policy statement or if US economic news surprises to the upside. Any sustained break above the resistance point at 148.65 would potentially lead to a new rally towards the psychological 149.00 level. Improved optimism regarding global trade, combined with stable US Treasury yields, could also continue supporting the pair higher. On the other hand, any dovish communication by the Federal Reserve or a dovish shift by the Bank of Japan would set off a pullback in USD/JPY. A fall below the crucial support area of 147.65–147.70 would expose the pair to additional drops towards 147.00 and even to the 146.55 level. A sudden decline in risk appetite or surprise weakening in future US macro data may also stimulate fresh demand for safe-haven Yen, hammering the pair down.

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Currencies EUR/USD

EUR/USD Pulls Back from Recent Highs Following US-Japan Deal that Bolsters Dollar and EU Trade Uncertainty Heightens

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  • July 23, 2025
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EUR/USD currency pair pulls back from more than two-week highs following fresh US Dollar strength and increasing uncertainty about the EU-US trade relationship as a drag on the Euro. Having seen a significant 1.3% advance in the last three days, the Euro is under pressure as concerns over possible 30% US tariffs, coupled with stalling negotiations, take their toll. At the same time, a “monster trade agreement” between the US and Japan has supported investor sentiment towards the Dollar. Through the pullback, the immediate bullish picture for the pair remains in place, with a key support holding above the 1.1720 threshold as markets look for the European Central Bank’s policy decision and EU consumer sentiment reports. KEY LOOKOUTS •  Market attention is on the status of current EU-US trade talks, as investors are concerned about possible 30% US tariffs on EU imports from August 1. •  Investors look to the Thursday ECB monetary policy release for signals on interest rate direction and potential easing as Eurozone growth slows. • The USD finds traction in a newly released US-Japan trade agreement, which could cap EUR/USD gains through the near term. • The EUR/USD currency pair remains above crucial support at 1.1720; a slide below may initiate further weakness to 1.1680 and 1.1645. The EUR/USD currency pair is under pressure after its robust three-day advance as investors respond to US Dollar’s fresh strength and increased uncertainty regarding EU-US trade relations. The Euro retreated from near two-week highs at 1.1760, trading around 1.1730 on fears that stalled trade negotiations may result in massive US tariffs on European imports on August 1. In contrast, a “massive trade deal” between the US and Japan has boosted the greenback, cutting short the Euro’s potential to advance. In spite of the correction, the pair has a near-term bullish outlook, with excellent support at 1.1720 in advance of major events like the ECB policy decision and EU consumer sentiment data. EUR/USD drifts from latest highs as US Dollar gains on reports of a trade agreement with Japan. EU-US trade tensions, combined with future ECB policy announcements, keep investors on their toes. Key support at 1.1720 remains in force, preserving the pair’s short-term bullish momentum. • EUR/USD falls back after surging 1.3%, weighed down by renewed US Dollar strength. • US-Japan trade agreement gives investors more confidence in the Dollar, taking it off recent lows. • Euro dips from 1.1760 to 1.1730, yet remains above key support at 1.1720. • EU-US trade uncertainty continues, with concerns over 30% US tariffs on EU exports from August 1. • ECB policy decision on Thursday is also a key market theme, with the expectation of a dovish tone. • Consumer Sentiment Index (EC) for July releases, but not likely to change sentiment unless it surprised positively. • Technical outlook is bullish, with attempts to the downside capped unless 1.1720 is breached. EUR/USD is attracting investor attention due to increasing geopolitical and economic uncertainty. The Euro’s recent upsurge has decelerated as worries intensify regarding the unclamped trade talks between the United States and the European Union. With a possible 30% US tariff awaiting EU products from August 1, market sentiment remains on edge. The announcement of a new US-Japan trade agreement has also added pressure on the Euro, as the deal boosts confidence in the US Dollar and highlights Washington’s aggressive trade stance. Meanwhile, EU representatives are heading to Washington in a last-minute attempt to secure a deal and avoid retaliatory measures, keeping traders on edge. EUR/USD DAILY PRICE CHART SOURCE: TradingView Adding to the subdued tone, the European Central Bank will be announcing its most recent monetary policy decision, which would influence market direction for the Euro over the next few weeks. There will be no significant shifts in interest rates, though the market will be keenly aware of any indication of the ECB’s economic outlook or upcoming policy measures. Also on the horizon is the European Commission’s Consumer Sentiment Index for July, which is expected to evidence only modest improvement and is still below the long-run average—a further indication of the Eurozone’s dud recovery. Such developments collectively highlight the wider macroeconomic and political dangers confronting the Euro. TECHNICAL ANALYSIS EUR/USD is still in a short-term bullish formation despite its recent retreat. The duo has found support at higher levels of 1.1720, which was earlier the level of resistance, indicating a possible base for fresh northward movement. The 4-hour Relative Strength Index (RSI) had moved into overbought levels following the recent upsurge, leading to the ongoing correction. A prolonged break below 1.1720 could pave the way for additional declines towards 1.1680 and 1.1645. On the positive side, resistance is capped at 1.1760, with a breach above the level set to reveal higher targets at 1.1790 and 1.1830. FORECAST As long as EUR/USD holds above the crucial support at 1.1720, the pair may return to bullish momentum. A successful bounce may propel the price back toward the immediate resistance at 1.1760. A breakdown below this level would probably open the way for a decline towards the next resistance levels at 1.1790 and possibly 1.1830, the monthly high. Encouraging news of EU-US trade negotiations or a dovish Federal Reserve could also give additional impetus to the Euro. On the negative side, a clean break below 1.1720 might indicate further weakness in the EUR/USD pair. This would tend to provoke a test of the next support at 1.1680, with a possible decline to 1.1645 along the reverse trendline. Poor Eurozone economic data, disappointing ECB guidance, or ongoing US Dollar strength on the back of positive trade news may fuel the downward pressure.

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Currencies USD/JPY

US Inflation Data and BoJ Policy Expectations Drive Outlook for USD/JPY

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  • January 16, 2025
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Over the last several days, the Japanese Yen had been picking up pace on positive news in form of building the expectations for next week’s interest rate hike from the Bank of Japan and strengthening inflationary tendencies in the economy of Japan, thus pushing JGB yields relatively closer to yields of US treasury bonds, an indicator in the favor of Yen. However, the USD/JPY pair continues to be strong, trading above the 156.00 mark, supported by a mild increase in the US Dollar and calming market fears over US President-elect Donald Trump’s trade tariffs. The latest US inflation data have helped shift the expectations for Federal Reserve policy and have been a source of strength for the Greenback. As the USD/JPY pair will likely be sensitive to key US macro data and the BoJ’s policy decision, the price will likely remain quite volatile with significant support at 155.00 and resistance at 156.35. KEY LOOKOUTS • Follow any news and updates on the Bank of Japan’s rate hike decision as this will significantly influence JPY strength and the USD/JPY movement. • Pay attention to US inflation report surprises, where less-than-expected inflation data can easily weigh down on Fed tightening expectations and dynamics of USD/JPY. • Track changes in the US-Japan yield differential: any signs of narrowing of this differential would further support the Japanese Yen, potentially limiting upside of USD/JPY. • Be aware of overall market sentiment since a risk-on or risk-off mood swing could change the demand for safe-haven assets, such as JPY, and subsequently influence USD/JPY price action. As long as the USD/JPY remains above the mark of 156.00, there are several important factors that would shape its future. First, the anticipation from the Bank of Japan’s decision regarding an interest rate increase will be the key, as any signalling towards tighter monetary policy would further strengthen the Japanese Yen. The second factor will be US inflation data, where softer-than-anticipated results might limit the Federal Reserve’s tightening moves, which could weaken the US Dollar. The narrowing US-Japan yield differential, which is being driven by rising Japanese bond yields, could continue to support the Yen. Lastly, market sentiment will be a significant factor; risk-on or risk-off moods will influence the demand for safe-haven assets like the Yen. Traders will have to watch these developments closely to gauge the future direction of USD/JPY. Key things to monitor in USD/JPY are the BoJ’s rate hike decision, US inflation data, the yield differential, and shifting market sentiment affecting risk appetite. • Growing bets for a rate hike by the Bank of Japan next week are supporting the Japanese Yen and influencing USD/JPY movements. • Rising inflation in Japan strengthens expectations for further BoJ tightening, pushing yields on Japanese Government Bonds (JGBs) to multi-year highs. • Softer-than-expected US inflation data has fueled speculation that the Federal Reserve may pause or slow down its rate hikes, impacting the USD. • The US-Japan yield differential has been narrowing, with US Treasury bond yields retreating and JGB yields rising, which supports the Yen. • Easing concerns about US trade policies and a positive risk-on mood are reducing demand for traditional safe-haven assets like the JPY. • The USD/JPY pair has a resistance area near 156.00 and possible support near the psychological level of 155.00 and may even continue lower to 154.50. • Traders are looking forward to the US macroeconomic data that may bring some hints regarding the Fed’s monetary policy, which can help decide the way for USD/JPY. The Japanese Yen has gained recently as expectations for the BoJ’s rate hike in its upcoming meeting are rising. The Japanese economy is also experiencing rising inflationary pressures. Markets are increasing bets on the further tightening of monetary policy. That has pushed the yields on JGBs to multi-year highs. In conjunction with a narrower US-Japan yield differential, that has supported the Yen. The softer-than-expected US inflation data has prompted traders to trim expectations for aggressive rate hikes by the Federal Reserve, which in turn has resulted in a small recovery for the US Dollar. Despite this, the USD/JPY pair remains capped below key resistance levels, with a psychological barrier at 156.00 and potential support near the 155.00 mark. As markets await the Bank of Japan’s policy decision and key US macroeconomic data, attention will be focused on how these developments influence the USD/JPY outlook. Narrow yield differential between US and Japanese bonds will continue to support the Yen, while a change in US inflation expectations would either dampen or boost USD demand. Of course, market sentiment is crucial; improving risk appetite and reducing trade concerns are reducing demand for traditional safe-haven assets, such as the JPY. Traders should pay close attention to these dynamics, as they may present the next important move of the USD/JPY pair; further breakdowns to 154.50 are possible if support levels are breached. TECHNICAL ANALYSIS Resistance areas for the USD/JPY remain around the 156.00 level, which has turned out to be one of the critical barriers during the past few sessions. If the pair can break above this level, then the next resistance zones are between 156.35 and 156.75, with further upside potential toward the 157.00 mark. On the downside, the psychological support at 155.00 is crucial, and a break below this level could open the door for a deeper pullback toward the 154.50 region. A move below 154.50 would likely be driven to the 153.40-153.35 area, where the pair may find support, potentially serving as the lower end of a four-month upward-sloping channel. The current technical outlook suggests that any sustained momentum above or below these key levels will determine the near-term direction for USD/JPY. USD/JPY Daily Price Chart Sources: TradingView, Prepared by ELLYANA FORECAST A push above the immediate resistance at the 156.00 level should send the pair towards the 156.35-156.45 zone, while a more significant break-out should push it above this zone toward 156.75 and maybe to the top at 157.00. Stronger and continuous bullishness will finally break into the

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