- I have often noted and recommended buying the US dollar against the Japanese yen from every downward level.
- For three consecutive trading sessions, the USD/JPY currency pair has been recovering, stabilizing around the resistance level of 144.65 at the time of writing the analysis, recovering from its strong losses that reached the support level of 139.88, the pair’s lowest in seven months.
- Earlier today, the Bank of Japan announced its monetary policy decision to keep interest rates unchanged for the time being, as expected.
- However, the central bank lowered its growth forecasts for this year and next, raising doubts about further tightening.
Bank of Japan Keeps Rates Unchanged as Expected
Today’s decision was clear: The Bank of Japan (BoJ) kept its key short-term interest rate unchanged at 0.5% at its May meeting, maintaining its highest level since 2008 and in line with market expectations. This unanimous decision came amid growing concerns that US President Trump’s tariff measures could weaken both US and global economic growth.
Tokyo is currently negotiating a trade agreement with Washington, which could affect future policy moves. Furthermore, the Japanese board had indicated it would raise interest rates if economic and price forecasts were realized. In its quarterly forecasts, the BoJ lowered its forecast for Japan’s fiscal year 2025 GDP growth to 0.5% from the 1.0% expected in January, citing trade risks and political uncertainty. The growth forecast for 2026 was also lowered to 0.7% from 1.0%. Also, the BoJ cut its core inflation forecast for fiscal year 2025 from 2.7% to 2.2% and expects it to fall further to 1.7% in fiscal year 2026 before rising to 1.9% in fiscal year 2027.
Meanwhile, overall inflation is expected to remain around 2% through the end of the fiscal year ending March 2028.
Trading Tips:
Dear TradersUp website follower, we still prefer buying the US dollar against the Japanese yen from every downward level, but without risk and distributing trades across several entry levels.
USD/JPY Technical analysis and Expectations Today:
Dear Reader, according to recent trading, the USD/JPY pair appears to be experiencing a notable recovery after reaching its low of 139.85 in April. The USD/JPY pair has achieved a bullish breakout above the 38.2% Fibonacci retracement level at 144.24 and is currently trading at 144.60. The pair’s price shows a clear rebound from its April lows, forming a series of higher lows and higher highs since mid-April. This structure suggests that buyers have regained market momentum after the sharp decline from the 151.34 area seen in previous months.
The Fibonacci retracement levels, drawn from the recent swing high to swing low, represent key reference points. With the price breaking above the 38.2% level (144.24), attention now turns to the 50% retracement level at 145.60, which could be the next resistance target. Above that, the 61.8% Fibonacci level at 146.95 will represent a significant hurdle for bulls. Looking at the moving averages, both are sloping downwards, indicating that the long-term trend remains bearish despite the recent recovery. The price will need to break above these dynamic resistance levels to confirm a more sustainable reversal.
Meanwhile, momentum indicators are showing strong bullish signals. The Stochastic indicator has crossed above the 50 level and is approaching the overbought zone, indicating strong buying pressure. Similarly, the Relative Strength Index (RSI) is trending upward and is currently near 60, reflecting increasing bullish momentum without yet reaching overbought territory. If the USD/JPY pair continues its upward trend, the 50% Fibonacci level will be the next key resistance to watch. Conversely, failure to hold above the 38.2% level could see the pair retest support near the April lows.
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