The pair is trading near 148.58, extending its gradual uptrend amid persistent monetary policy divergence between the and the Bank of Japan (BoJ). Despite recent moderation in U.S. rate cut expectations, the Fed remains relatively hawkish compared to the BoJ, which continues to implement ultra-loose with only cautious steps toward normalization.
This gap in interest rate trajectories continues to underpin strength in the against the yen.
U.S. Treasury yields remain elevated, with the 10-year yield holding around 4.40%, fueled by a combination of sticky , solid , and increasing fiscal concerns, particularly in light of President Trump’s tariff threats and expansive fiscal agenda. These dynamics reinforce demand for dollar-denominated assets, drawing capital inflows that further strengthen the greenback.
In contrast, Japan’s macroeconomic landscape remains fragile. While temporarily sits above the BoJ’s 2% target, underlying pressures remain soft, especially given tepid wage growth and weak household consumption. Governor Ueda has hinted at further YCC or interest rate policy adjustments later in the year, but markets remain unconvinced, especially with the BoJ continuing to cap long-term yields and maintain a sizable balance sheet.
Adding to the yen’s weakness are structural issues: Japan’s persistent trade deficit and strong overseas investment appetite by Japanese institutions (with limited hedging activity) exacerbate downward pressure on the currency. Moreover, although the yen traditionally serves as a safe-haven asset, its appeal has diminished amid higher U.S. yields and stronger dollar momentum.
Unless the BoJ delivers a concrete policy surprise or U.S. economic data deteriorates sharply, the USD/JPY is likely to remain supported in the near term. However, with the pair now trading close to key resistance levels and Japanese authorities previously intervening near these zones, the risk of verbal or actual intervention could increase if the yen weakens further.
The USD/JPY pair is exhibiting bullish momentum on the daily timeframe, firmly trading above its key moving averages and approaching major resistance levels. The 50-day EMA (currently at 145.76) has recently crossed above the 100-day EMA (at 146.49), forming a bullish crossover that underscores the pair’s upward bias.
This alignment of EMAs acts as dynamic support, reflecting strengthening medium-term momentum. Price action is also pushing the upper boundary of the Bollinger Bands, which have widened slightly, signaling increased volatility and a strong directional move to the upside. The pair is currently testing the mid-April highs near 148.50–148.60, an area that aligns with both the Bollinger Band cap and the VWAP resistance.
The Stochastic RSI is hovering around the overbought zone at 79–85, suggesting that short-term upward momentum may be stretched and a brief consolidation or pullback could occur. However, overbought readings alone are not a sell signal, especially in strong trending conditions.
Meanwhile, the MACD shows positive momentum with the MACD line remaining above the signal line and in positive territory, supporting a continuation of the bullish move despite some early signs of histogram fading. The overall technical structure points to a healthy uptrend, with any near-term dips likely to attract buyers.
From a price level perspective, the first key resistance lies at 148.55–148.60, marked by the VWAP and recent intraday highs. A break above this zone could pave the way toward the psychological barrier at 149.33, which also coincides with the upper Bollinger Band. Further bullish extension may target the 150.00 level, a historically significant round number that could trigger profit-taking or intervention fears.
On the downside, immediate support is seen at 146.49, the 100-day EMA, followed by the confluence of the 50-day EMA and Bollinger Band midline at 145.76. Deeper pullbacks may find support at 144.00, a former resistance-turned-support level from early July. Overall, as long as the price remains above the 145.50–146.00 zone, the uptrend remains intact, with dips likely to be bought.
Michel Saliby.
Senior Market analyst at FxPro.