USD/JPY, GBP/JPY Technical Outlook: BOJ Inaction Weighs on Japanese Yen

BOJ Keeps Rates Steady:

Interest rates held at 0.5% in a unanimous decision
BOJ reaffirmed commitment to raising rates if economic and price forecasts materialise
BOJ downgraded GDP growth forecasts for fiscal years 2025 and 2026
Inflation is still expected to hover around the 2% target through FY2027
GBP/JPY and USD/JPY look set to break higher

The Bank of Japan (BoJ) kept its monetary policy unchanged on Thursday, holding interest rates at 0.5%. While market pricing had suggested a ~97% chance of no change today, the BoJ is a central bank known for going against consensus from time to time.

The board left its inflation outlook unchanged but lowered growth forecasts for fiscal years 2025 and 2026, citing uncertainty over US tariffs and broader trade tensions. Core CPI was slightly lower, and headline CPI is expected to hover around the BoJ’s 2% target through to FY2027.

Trump’s Tariffs Could Delay, Not Derail, Further BoJ Hikes

Lower growth expectations and rising concerns over trade could be taken as a sign that the BoJ is losing its appetite for further rate hikes this year. However, the accompanying statement noted that “we will continue to raise our policy rate” if the economic outlook plays out as expected. Yet with the Japanese yen weaker across the board, traders are no doubt questioning whether further hikes will materialise.

View related analysis:

USD/JPY Technical Analysis: US Dollar vs Japanese Yen

I outlined a bullish case for the US dollar in several articles over the past couple of weeks (see links above). More specifically, USD/JPY appears to be rising in line with my call for an ABC correction higher. The daily chart shows it is nearing last week’s high, so a pullback may be due. However, a break above last week’s high would assume a run to 145, with a break above that bringing the 146 handle into focus — near the weekly VPOC and trend resistance.

USD/JPY 1-hour chart

The intraday chart shows prices have reached the daily R2 pivot and are now approaching last week’s high (LW high). The RSI (14) is also overbought, so these are not levels I would personally be seeking longs around. However, if prices do retrace lower, bulls could look for evidence of a swing low around the daily R2 or the

143.24 high. My bias remains bullish above the 142.80 high-volume node (HVN).

GBP/JPY Technical Analysis: British Pound vs Japanese Yen

The daily chart has been trending higher since GBP/JPY staged a volatile shakeout and reversal around the 186 support level. While GBP/JPY has printed three down days since Friday’s high, they appear to be part of an orderly and shallow correction within a strong bullish trend. Support was also found around the 10- and 20-day EMAs, as well as the weekly and monthly pivot points.

Momentum has clearly realigned with the bullish trend, so I’m now on guard for GBP/JPY to break to a new cycle high. The bias is for a move towards 193, near the weekly R1 pivot.

GBP/JPY 1-hour chart

The 1-hour chart highlights the burst of bullish momentum following the BoJ decision. Notably, support was found around the 200-day EMA before bulls regained control.

Resistance has been met around the daily R1 pivot (191.60) and the 191.27 highs, so perhaps GBP/JPY will offer bulls a pullback opportunity — either to reload or to join the move higher. Note that the daily R2 pivot sits just above the 191.72 and 191.84 highs, making it a viable target for bulls ahead of a larger move to 193.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.