Adapted from the original article by Adam Lemon for DailyForex
USD/JPY Forex Signal – 23 October 2025
Overview:
The USD/JPY currency pair exhibited a slight bullish movement during the start of the Asian trading session on October 23, 2025. This upward trend continues to reflect ongoing strength in the US dollar against the Japanese yen, a trend largely driven by diverging monetary policies between the Federal Reserve and the Bank of Japan (BoJ). Despite periodic corrections, the underlying fundamentals continue to support USD strength and JPY weakness.
With markets closely watching central bank cues and the global inflation picture, forex traders remain attentive to any signs of intervention from the BoJ or shifts in US interest rate expectations. Against this backdrop, the USD/JPY pair remains volatile but biased toward the upside.
Current Market Dynamics:
– The USD is underpinned by expectations that the Federal Reserve will maintain high interest rates for an extended period.
– The BoJ maintains its ultra-loose monetary policy, including yield curve control and low interest rates.
– Rising US Treasury yields are translating into upward pressure on the USD/JPY pair.
– The Japanese government and the BoJ are vocal against excessive yen depreciation, raising the risk of verbal or actual intervention.
As of the latest trading data:
– USD/JPY traded as high as 150.20 before experiencing slight pullbacks.
– The current price hovers around the psychological resistance level of 150.00.
– Technical indicators are signaling continued bullish momentum, though traders are cautious of any reversal signals.
Fundamental Drivers:
1. Divergence in Monetary Policy
– US Federal Reserve: Strong US economic data, including labor market and GDP performance, have reinforced expectations that the Federal Reserve will maintain tight monetary policy. High interest rates in the US attract capital flows into the dollar, further strengthening the currency.
– Bank of Japan: In contrast, the BoJ continues to pursue near-zero interest rates as inflation in Japan still lags behind the central bank’s target, particularly on a sustainable and wage-driven basis.
2. Risk of Japanese Government Intervention
– The Japanese government has previously intervened in the FX market to support the yen when the USD/JPY exceeded key levels such as 145.00 and 150.00.
– Any sudden and sharp movements above the 150.00 area could prompt another round of intervention. However, traders have become accustomed to limited and often short-lived effects from such actions.
3. US Economic Data
– Recent data on inflation, consumer spending, and employment continues to come in strong. Core PCE data and Nonfarm Payrolls exceeded expectations in recent months, strengthening the US dollar.
– This resilience supports the interest rate hike narrative or at least reinforces the view that the Fed is not prepared to cut rates in the near term.
4. Japan’s Economic Outlook
– Japan’s economy remains relatively subdued with persistent deflationary pressures and irregular wage growth.
– These factors justify the BoJ’s reluctance to end their accommodative monetary policy, further weakening the yen.
Technical Analysis:
The USD/JPY pair currently shows a strong bullish trend across various timeframes, although the psychological ceiling of 150.00 remains a key resistance level.
Key Technical Levels:
– Resistance:
– 150.20: Recent swing high, representing a key short-term resistance.
– 150.50: Potential future resistance if current bullish momentum continues.
– 151.95: The multi-decade high from 2022/2023, the longer-term ceiling that might bring stronger intervention risk.
– Support:
– 149.50: Minor support, seen as the previous local low.
– 148.90: More substantial support where buyers have emerged in previous sessions.
– 147.50: Strong support from the recent sideways consolidation.
Moving Averages:
– 50-period Moving Average: Currently pointing upward and trailing price action, indicating medium-term bullish bias.
–
Explore this further here: USD/JPY trading.