US Dollar Outlook: USD/JPY
USD/JPY carves a series of lower highs and lows following the failed attempt to test the April high (150.49), and the weakness in the exchange rate may persist as it falls to a fresh weekly low (145.86).
US Dollar Forecast: USD/JPY Struggles amid Failure to Test April High
USD/JPY extends the decline from the start of the week even as the US reaches a trade deal with Japan, and expectations for lower US interest rates may keep the Greenback under pressure as President Donald Trump argues that ‘our rate should be three points lower than they are’ on Truth Social.
As a result, speculation for an imminent Federal Reserve rate-cut may keep USD/JPY under pressure ahead of the next interest rate decision on July 30, and Chairman Jerome Powell and Co. may prepare to further unwind its restrictive policy as the central bank ‘projects that the appropriate level of the federal funds rate will be 3.9 percent at the end of this year.’
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However, the Federal Open Market Committee (FOMC) may keep interest rates higher for longer as ‘increases in tariffs this year are likely to push up prices and weigh on economic activity,’ and swings in the carry trade may continue to sway USD/JPY especially as the Bank of Japan (BoJ) seems to be in no rush to adjust its policy.
With that said, recent price action may lead to a further decline in USD/JPY as it slips to a fresh weekly low (145.86), but the exchange rate may consolidate over the coming days should it snap the bearish price series.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY still carves a series of lower highs and lows as it extends the decline from the start of the week, and a move/close below 145.90 (50% Fibonacci extension) may push the exchange rate toward the 144.40 (23.6% Fibonacci retracement) to 144.60 (50% Fibonacci extension) region.
- Next area of interest comes in around the monthly low (142.68), but USD/JPY may snap the bearish price series should it struggle to push/close below 145.90 (50% Fibonacci extension).
- A move back above 147.10 (38.2% Fibonacci retracement) brings 148.70 (38.2% Fibonacci retracement) on the radar, with the next area of interest coming in around the monthly high (149.19).
Additional Market Outlooks
AUD/USD Bounces Back Ahead of June Low to Register Fresh Yearly High
British Pound Forecast: GBP/USD Stages Three Day Rally
Gold Price Rallies to Fresh Monthly High
Canadian Dollar Forecast: USD/CAD Reverses Ahead of June High
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
