Title: USD/JPY Forecast: Pair Maintains Strong Upward Momentum
Author: Written by Christopher Lewis, originally published on October 28, 2025, via FX Empire and reprinted by Insurance News Net.
The USD/JPY currency pair continued its strong rally on October 28, 2025, reflecting broader market sentiment favoring the US dollar amid global economic uncertainty. As the pair moves steadily higher, it is showing resilience against yen strength and benefiting from the diverging monetary policy directions of the Bank of Japan (BoJ) and the Federal Reserve (Fed). The USD/JPY pair has become a focal point for traders seeking to capitalize on interest rate differentials, risk sentiment, and macroeconomic trends.
Technical Analysis Supports the Uptrend
The price action of the USD/JPY pair indicates a persistent bullish structure, supported by several technical indicators:
– The pair is trading above key moving averages, such as the 50-day and 200-day, which generally signals continued strength.
– Recent breakouts above resistance levels have opened the door to further gains.
– The daily charts show higher highs and higher lows, classic signs of a well-structured uptrend.
– Momentum indicators like the Relative Strength Index (RSI) hover in bullish territory, though not yet at overbought levels, suggesting room for additional upside.
Support and Resistance Levels
Traders are closely monitoring support and resistance levels to determine entry and exit points. According to recent chart analysis:
– Key resistance levels lie around the 151.00 and 152.00 zones. A decisive break above these could signify an acceleration in the uptrend.
– On the downside, support is found at 150.00 and 149.00, with the latter representing a psychological level as well as previous consolidation zones.
– The 50-day moving average, currently trending near 148.80, adds another layer of dynamic support, helping to keep the bullish bias intact.
Any significant deviation from these levels or abrupt shifts in economic policy could cause quick reversals, but as of now, the bias remains favorable for the US dollar.
Monetary Policy Divergence Drives Price Action
The major force behind the movement of the USD/JPY is the contrasting policy stance between the US and Japanese central banks.
Federal Reserve:
– The Fed maintains a relatively hawkish outlook.
– Interest rates remain elevated as inflation remains above the Fed’s 2% target.
– Chairman Jerome Powell has emphasized data dependency but does not anticipate rate cuts in the short term.
– Higher interest rates in the US continue to attract global capital flows, increasing demand for the US dollar.
Bank of Japan:
– The BoJ remains firmly accommodative. Despite recent rhetoric hinting at possible gradual normalization, the Bank still holds interest rates in negative territory.
– Even though inflation in Japan has picked up slightly, it remains weaker compared to Western economies.
– The BoJ’s focus continues to be on stabilizing financial markets and stimulating domestic growth, which puts downward pressure on the yen.
These diverging outlooks create favorable conditions for the US dollar as investors pursue higher yields and safer returns.
Safe-Haven Flows and Geopolitical Concerns
In addition to monetary policy dynamics, the USD/JPY is influenced by broader market themes:
– Safe-haven demand for the US dollar increases during times of global uncertainty.
– Escalating geopolitical tensions in Eastern Europe and the Middle East have led investors to prefer USD-denominated assets.
– Despite the Japanese yen traditionally being considered a safe-haven asset itself, its appeal is diminished due to ultra-loose monetary policy and low returns.
The result is a scenario in which the dollar maintains dominance, even during volatile global conditions.
Economic Data Influences
Economic data releases have also played a key role in shaping market expectations:
– US economic indicators such as strong employment growth, resilient GDP numbers, and consistent retail sales support the Fed’s case for maintaining high interest rates.
– Japanese data has been less encouraging.
Explore this further here: USD/JPY trading.