Original Analysis by: DailyForex.com
Date: October 31, 2025
Source: https://www.dailyforex.com/forex-technical-analysis/2025/10/usdjpy-forecast-31-october-2025/236323
Rewritten Content:
USD/JPY Forecast – October 31, 2025: Yen Weakness Persists as USD/JPY Approaches Multi-Decade Highs
The USD/JPY currency pair remains in strong focus for forex traders as it continues to push into territory not seen in decades. As of October 31, 2025, the US dollar maintains solid momentum against the Japanese yen, with the pair moving toward the psychologically and technically significant 152 handle. The primary drivers behind this rally include diverging monetary policies between the Federal Reserve and the Bank of Japan, as well as broader risk-on sentiment in global financial markets.
Current Market Dynamics and Drivers
Several key factors are contributing to the strength of the US dollar and the parallel weakness of the Japanese yen:
• Divergent Monetary Policies:
- The Federal Reserve has maintained a relatively hawkish stance, with interest rates remaining elevated to contain persistent inflation pressures. This environment supports dollar strength as investors seek yield advantage in USD-denominated assets.
- The Bank of Japan, on the other hand, continues to uphold ultra-loose monetary policy. Despite hints at considering policy normalization, actual changes have been minimal. Japan continues to operate with negative or near-zero interest rates, making the yen unattractive as a carry currency.
• Yield Differential:
- US Treasury yields remain high across various maturities, reinforcing the appeal of the dollar. The 10-year US Treasury yield continues to hover near recent peaks, reflecting the Fed’s commitment to tight monetary policy.
- Japanese government bonds (JGBs) offer minimal returns, and the Bank of Japan’s bond-buying program further suppresses yields. This divergent environment leads to capital outflows from Japan and added downward pressure on the yen.
• Technical Momentum:
- Technical indicators continue to favor bullish price action in USD/JPY. Momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) both suggest that the pair remains in an upward trajectory.
- Buyers appear to be firmly in control, with dips supported around major moving averages.
• Confidence in US Economy:
- Strong employment data and robust GDP growth figures have strengthened long-term confidence in the US economy. This contrasts with slower economic growth in Japan and sluggish domestic consumption, which fails to offset yen-related declines.
• BOJ Verbal Intervention:
- Despite the Bank of Japan’s occasional expressions of concern about the weakening yen, actual intervention has been limited. There have been statements from officials warning against rapid depreciation, but these have so far failed to reverse or even substantially slow the rally.
- Currency traders continue to test the BOJ’s tolerance for a weakening yen, gradually pushing the pair toward higher levels.
Price Action and Technical Analysis
As of the latest trading sessions, USD/JPY is approaching the critical resistance level near 152, which has historically acted as a potential intervention threshold. Market participants are closely tracking the price structure for signs that the BOJ may step in.
Key Technical Observations:
• Resistance and Psychological Levels:
- 152 is viewed as both a psychological round number and a technical ceiling. It previously acted as a cap during the last strong rally in 2022 and early 2023, prompting cautious trading as the pair approaches this level again.
- Above 152, traders will look for confirmation of breakout momentum, with potential extension toward 155 in the medium term if no effective intervention materializes.
• Support Zones:
- Immediate support lies near the 149.50 to 150.00 range, where buyers have repeatedly entered the market on pullbacks.
- A more significant support area sits around 147.00, where prior consolid
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