USDJPY Analysis: Clear Direction Ahead

Fundamental Analysis of USDJPY

USDJPY Key Takeaways

• BOJ may wait and see: The Bank of Japan is expected to keep interest rates unchanged on Thursday as U.S. tariffs continue to hit confidence, warning that risks to the fragile economy are increasing, which may keep policy in wait-and-see mode at 0.5%. In its quarterly report, the Bank of Japan is also seen delaying its expected inflation target of 2% from the second half of fiscal 2025 in the current forecast.
• BOJ may lower its growth forecast: In addition, while the Bank of Japan is ready to lower its growth forecast, it is expected to signal that the risks posed by the US tariff hike will not undermine the momentum of wage and price increases that are seen as key to further rate hikes. The path to policy normalization may be longer than previously expected, as trade tensions have prompted large exporters, which have been leading wage growth until this year, to consider slowing or interrupting wage increases next year. .
• Key to the yen trend: Based on the high probability of the Bank of Japan’s economic forecast downgrade and the Bank of Japan’s suspension of interest rate hikes, investors are more concerned about the Bank of Japan’s wording, and the Bank of Japan has reason not to make its policy outlook sound too dovish. Domestic inflationary pressures are accumulating, and rising food prices have pushed Tokyo’s core inflation (a leading indicator of national trends) to a two-year high in April. If it is ultimately dovish, there is a probability that the dollar will continue to rise against the yen.

Technical Analysis of USDJPYUSDJPY Daily Chart Insights

• Stochastic oscillator: The indicator is about to send a short signal below the 50 median line, suggesting that short-term short forces have the upper hand again.
• MA resistance: Although the exchange rate rebounded strongly last week, it fell sharply after touching the purple 13-day MA yesterday. There is a probability that the short-term adjustment trend will end, and the exchange rate may continue the previous downward trend.
• Trend direction: In addition to the interest rate decision of the Bank of Japan, the specific trend direction of the exchange rate depends on the two key price levels above and below, the 143.93 resistance level and the 140.516 support level. Once the exchange rate is closed on the other side of the two price levels, the trend direction will be clear.

USDJPY 2-hour Chart Analysis

• Stochastic oscillator: The indicator quickly fell to the oversold area, and the short-selling force took the upper hand. After waiting for the indicator to send a long signal, pay attention to the short-term entry and long opportunities.
• Wolfe wave: After the exchange rate formed the Wolfe wave (wedge area) yesterday, it broke the trend line to clarify the short trend. The first target below is around 141.593, and the second target is around 141.060.

USDJPY Pivot Indicator

• According to the trading central in Ultima Markets APP, the central price of the day is established at 142.79,
• Bullish Scenario: Bullish sentiment prevails above 142.79, first target 143.33, second target 143.65;
• Bearish Outlook: In a bearish scenario below 142.79, first target 141.52, second target 141.20.

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