Original article credit: Mitrade Newsroom
Title: USD/JPY Outlook After BoJ’s Policy Stance: Yen’s Struggles Continue Amid Fed-Boj Divergence
The USD/JPY pair has been closely monitored by forex traders as central banks around the world fine-tune their policies to strike a balance between inflation control and economic growth. Among the most watched developments is the policy divergence between the Bank of Japan (BoJ) and the Federal Reserve (Fed), which continues to exert pressure on the Japanese yen. As monetary policy tightening becomes the global norm, Japan remains the outlier, opting for an accommodative stance that keeps the yen vulnerable against its counterparts.
On September 7, 2025, the USD/JPY pair saw notable movement following remarks from key economic figures and the release of influential data. The yen remains under pressure, and the USD maintains its bullish trend due largely to the Fed’s hawkish rhetoric and Japan’s continued commitment to ultra-loose monetary policy. This divergence not only shapes the direction of the currency pair but also influences broader financial markets, including equities and fixed-income instruments.
Key Developments Driving USD/JPY Movements
The forex market dynamics on September 7 were driven by several important developments:
– Japan’s GDP Data Miss
– Japan’s annualized GDP growth for Q2 was revised to 4.8 percent, below the preliminary figure of 6 percent
– The quarter-on-quarter GDP change was adjusted down from 1.5 percent to 1.2 percent
– These figures missed market expectations and highlighted the fragility of Japan’s economic recovery
– Domestic consumption remained weak, despite recovering exports
– USD Gains Traction
– Positive US economic indicators continued to support the greenback
– Market sentiment reflected confidence in the Fed’s position, with expectations leaning toward further rate hikes if inflation remains persistent
– Stronger job numbers and ISM services data intensified USD buying
– Central Bank Commentary
– Bank of Japan (BoJ) Governor Kazuo Ueda reiterated the need for ongoing monetary easing
– Ueda stated that wage growth and inflation momentum were not yet strong enough to justify tightening
– Fed officials, on the other hand, maintained a hawkish tone, reinforcing the likelihood of extended higher interest rates
– Bond Market Reactions
– U.S. Treasury yields saw marginal gains, lending more support to the USD
– Japanese yields stayed relatively subdued, emphasizing the impact of Japan’s yield curve control measures
– Intervention Speculation
– The yen’s persistent weakness has led to increased market speculation over potential intervention from the Japanese government
– Officials are monitoring exchange rates but so far, have shown reluctance in intervening unless volatility becomes disruptive
Technical Analysis: USD/JPY Chart Outlook
The USD/JPY has shown strong upward momentum in recent weeks, driven largely by fundamentals, yet supported by technical indicators. Traders are closely watching key resistance and support levels to determine future price action.
Resistance Levels:
– 147.50: This was a recent high and forms the first major resistance. A clean break above this level could encourage bulls to test 150.
– 150.00: A psychological level and multi-year resistance. Breaching this point may trigger concerns about intervention by Japanese authorities.
Support Levels:
– 145.00: A key technical support where price consolidated earlier. If broken, short-term bearish sentiment could grow.
– 143.20: A lower support level that could act as a floor in the event of a deeper correction.
Technical Indicators:
– RSI (Relative Strength Index) is nearing overbought territory but not yet flashing a reversal signal.
– MACD (Moving Average Convergence Divergence) remains in bullish mode, supporting continued buying interest.
– Moving averages (50-day and 200-day) are aligned to the upside, reinforcing the bullish structure.
Japan’s Economic Fragility
Japan’s economy continues to
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