Fundamental Analysis

• The Bank of Japan has decided to keep its policy rate unchanged, leading to a sharp rise in USDJPY.
• Meanwhile, several U.S. companies have downgraded their earnings forecasts, signaling that the impact of tariffs is becoming more pronounced.

USDJPY Technical Analysis

Analyzing the daily chart of USDJPY, the pair has broken through the resistance at 144.50JPY. It is now forming a minor uptrend based on Dow Theory by setting new recent highs.

The primary reason behind this move is the BOJ’s decision to maintain its current interest rate. Previously, there were strong expectations for a rate hike, which had been putting upward pressure on the JPY. However, due to the Trump administration’s tariff policies, the Federal Reserve has become cautious about rate cuts, while the BOJ is now in a difficult position to raise rates. As a result, Japan’s 10-year government bond yield has also declined.

Unlike in previous weak-JPY phases, a narrowing of the U.S.-Japan interest rate differential is not expected in the short term, leading to renewed selling of the JPY.

Day trading strategy (1 hour)

Looking at the 1-hour chart, USDJPY is currently forming a band walk between the +1σ and +2σ lines of the Bollinger Bands. While the resistance near 145JPY is expected to be strong, short positions should be paused for now, and traders may need to wait and observe the price movement. In the short term, the pair remains in an upward trend.

However, the U.S. employment report is scheduled for release today, and depending on the results, USDJPY could experience sharp fluctuations. If the number of new jobs is significantly lower than expected, the USD may weaken, potentially leading to a reversal in the pair.

Today’s employment data will be closely watched.

Support/Resistance lines

Key support and resistance lines to consider:

• 146.45JPY – Major Resistance Level
• 144.50JPY – Major Support Level

Market Sentiment

USDJPY – Sell: 55% / Buy: 45%

Today’s important economic indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.