Original article by: Christopher Lewis
Source: DailyForex – “USD/JPY Forecast: 20 October 2025”
Rewritten and Expanded Version (Over 1000 words):
USD/JPY Technical Forecast: Threat of Intervention Shadowing a Bullish Trend
The USD/JPY pair continues to maintain a strong bullish trajectory despite increasing concerns about potential intervention from the Bank of Japan. The currency pair has shown considerable resilience, moving higher over the past several sessions, driven by continued strength in the U.S. dollar and higher yields in the United States. However, as prices edge closer to psychologically significant levels, the potential for government or central bank intervention increases, adding a layer of caution for traders.
Current Market Overview
Recent trading sessions have confirmed the broader bullish trend in USD/JPY as the pair continues testing yearly highs. U.S. Treasury yields remain elevated, supporting the U.S. dollar broadly. Meanwhile, the Japanese yen has weakened significantly in 2025, mainly due to the Bank of Japan’s dovish monetary policy stance, in stark contrast to the Federal Reserve’s continued hawkish posture.
Despite the ongoing bullish strength in the pair, traders are mindful of intervention risks. Japanese authorities have a history of verbally, and occasionally physically, intervening to stem rapid yen depreciation, and similar situations have prompted action in the past.
Key Technical Observations
– Strong uptrend continuation: USD/JPY has remained firmly above critical moving averages, confirming the pair’s long-term bullish trend.
– Immediate resistance: The current resistance zone lies near 152, a psychologically important level. This area has previously acted as a barrier, and traders are watching closely to see if the pair can break above it.
– Support levels: Nearby support is evident around the 150.50 level, and below that, the 50-day Exponential Moving Average (EMA) provides technical reinforcement for further downside protection.
– Overbought conditions: While the pair remains in an uptrend, technical oscillators such as the Relative Strength Index (RSI) suggest potential overbought conditions, increasing susceptibility to pullbacks, especially amid intervention fears.
Support from U.S. Interest Rate Expectations
A central factor behind USD/JPY’s strength is the robust U.S. dollar, itself propped up by high interest rate expectations. The Federal Reserve has remained firm on controlling inflation, even at the expense of slowing economic growth.
– The current U.S. benchmark interest rate is high, making dollar-based investments more attractive to global investors.
– In contrast, the Bank of Japan has kept rates near negative or ultra-low conditions, creating a wide interest rate differential.
– As long as the Fed keeps its policy tight and the BOJ remains dovish, USD/JPY will find underlying strength due to carry trade dynamics.
Carry Trade Support
One of the most influential forces behind the continual widening of USD/JPY is the revival of carry trade strategies. In such trades, investors borrow in a low-yielding currency like the Japanese yen and invest in higher-yielding currencies or assets, profiting from the interest rate differential.
– Japan’s low interest rates make the yen a preferred funding currency.
– The U.S. rate environment provides attractive returns, sustaining USD demand.
– Carry traders amplify upward movements in USD/JPY when volatility is low and central bank policies are predictable.
Risk of Intervention Remains Visible
As USD/JPY approaches and potentially tests the 152.00 level, attention is turning toward the possibility of direct government or central bank intervention. Historically, this level has prompted action, and verbal threats alone have had an impact on pricing.
– In 2022 and 2023, Japanese policymakers intervened verbally and physically once the currency reached similar thresholds.
– The Ministry of Finance, along with the Bank of Japan, may issue clear warnings to prevent “excessive volatility” or “disorderly markets.”
– Intervention threats, whether carried out or not, can cause temporary retracements or add uncertainty
Explore this further here: USD/JPY trading.