- The USD/JPY outlook remains mildly positive after the Bank of Japan leaves rates unchanged.
- Analysts believe the upside may be capped by 145.50, observing a ranging behavior.
- Geopolitics could boost yen demand amid safe-haven flows.
The USD/JPY outlook remains slightly supported as the pair snapped a two-day winning streak after the Bank of Japan left the policy rate unchanged at 0.50%. Earlier this week, the pair saw a rise amid safe-haven flows triggered by the Middle East crisis.
-If you are interested in forex day trading then have a read of our guide to getting started-
However, the yen bulls may struggle to find a meaningful trend as the Bank of Japan could postpone the rate hikes to the first quarter of 2026 due to tariff uncertainty. In the G7 meeting, the US and Japan could not reach an agreement on the tariffs. Japan’s Finance Minister Kato also stated that they have no plan to meet US Treasury Secretary Bessent. This is another factor that could cap yen’s gains. The US plans to impose 25% tariffs on Japanese vehicles and 24% tariffs on other imports.
According to the UOB analysts, the USD/JPY price may remain within a familiar range of 143.50 to 145.50 with the least probability of breaking the level.
On the other hand, the US dollar remains significantly weak amid last week’s dismal inflation figures. Moreover, the tariff uncertainty continues to linger, giving no room to recover. The currency is gradually losing its safe-haven status as well. Given the recent geopolitics, gold, and yen tend to perform way better than the dollar.
On the geopolitical front, the Iran-Israel conflict enters the fifth day with both sides aggressively attack. President Trump warned Iranians through Truth Social post to evacuate Tehran. A White House official clarified that the purpose of the post was to show urgency to bring Iran to the table for talks.
Investors are cautious as we head towards the FOMC meeting due tomorrow. The Federal Reserve is widely expected to keep rates on hold. However, the monetary policy statement is important to watch as market participants are keen about the policy path and number of cuts in 2025.
Key Events for USD/JPY Ahead
- Core Retail Sales m/m
- Retail Sales m/m
The core retail sales are expected to grow, while the retail sales may show a contraction.
USD/JPY Technical Outlook: Bullish Pinbar, Rising Trendline
The 4-hour chart shows a bullish pinbar and a rising trendline, lending enough support to the pair. Moreover, the price stays well above the 20-period SMA, which is another bullish sign. The RSI is at 56.0, heading north. These factors reveal that the buyers are mildly dominating. The immediate resistance comes at 145.00 ahead of 145.50.
-Are you looking for the best AI Trading Brokers? Check our detailed guide-
On the flip side, the close below the 20-period SMA could ignite the selling pressure leading towards a support at 144.00 ahead of 143.50.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
