Forex

USD/JPY Vulnerable Despite Post-Fed/BoJ Rebound

Nikos Tzabouras Written by Nikos Tzabouras

USD/JPY Analysis

After its second rate hike this year to around 0.25%, the bank of Japan hit the pause button last week and showed less urgency for further removal of accommodation. Policymakers had previously guided to more rate increases ahead, but that passage was removed from the latest policy statement. [1]

This less hawkish language allowed USD/JPY to extend the recovery from its fourteen-month lows and despite the Fed's cutting, while US rates will remain much higher than those in Japan for a long time. The pair now has a chance to break above the EMA200 and the 23.6% Fibonacci of the July-September slump and challenge the 38.2% level.

However, we are cautious around more gains, as the upside is unfriendly both technically and fundamentally. The thick daily Ichimoku can quash stronger advance and the pair already faces pushback at the aforementioned resistance cluster. Rejection would reaffirm the bearish bias and open the door to lower lows towards 137.22.

The monetary policy differential is unfavorable and can lead to further unravelling of the carry trade. The Fed pivoted with a jumbo 0.5% cut and pointed to another 50 bps within this year [2]. Its Japanese counterpart showed apprehension but remains on track for further tightening and one more hike within the year is reasonable. Officials upgraded their views on private consumption and inflation (ex-fresh food) rose for fourth straight month in August.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.

As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.

References

1

Retrieved 23 Sep 2024 https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2024/k240920a.pdf

2

Retrieved 03 May 2026 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20240918.htm

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