03.09.202521:08 Forex Analysis & Reviews: USD/JPY. Analysis and Forecast

Today the Japanese yen resumed its rise on the back of U.S. dollar weakness following the JOLTS report, which showed a sharp decline in job openings and an increase in layoffs, as the Far Eastern currency itself showed no signs of inherent strength.

Hiroshi Moriyama, Secretary General of Japan's ruling party and a close ally of Prime Minister Shigeru Ishiba, announced on Tuesday his intention to step down. On the same day, Japanese media reported that former Prime Minister Taro Aso plans to officially announce on Wednesday the launch of his campaign for the presidency of the Liberal Democratic Party (LDP).

Bank of Japan Deputy Governor Ryozo Himino on Tuesday emphasized the need for the central bank to continue raising interest rates, while also noting that global economic uncertainty remains significant. This indicates that the Bank of Japan is in no rush to tighten credit conditions, thereby supporting yen stability.

On Wednesday, Bank of Japan Governor Kazuo Ueda reaffirmed the central bank's stance on rate hikes, noting that he will closely monitor how economic indicators and inflation align with forecasts. Meanwhile, investors appear confident that the Bank of Japan will continue moving toward monetary policy normalization, given the expected growth in wages that could further fuel demand-driven inflation.

At the same time, traders have already priced in about a 90% probability of a 25-basis-point rate cut by the Federal Reserve at the conclusion of its two-day meeting scheduled for September 17. Therefore, although the timing of a Bank of Japan rate hike remains unclear, there is a divergence in expectations.

From a technical perspective, USD/JPY bulls are looking for sustained movement above the 200-day simple moving average (SMA) and confirmation of growth beyond the round level of 149.00.

Buying above the 200-day SMA and a move beyond 149.00 would confirm a bullish breakout of the monthly trading range. With oscillators on the daily chart only beginning to gain positive momentum, USD/JPY could accelerate its uptrend toward the next target at 149.50–149.60. Momentum could then continue toward the psychological level of 150.00, before spot prices attempt to retest the August high near 151.00.

However, dollar weakness after the release of U.S. economic data prevented this scenario from unfolding. Therefore, the situation can also be viewed from the opposite side. The round level of 148.00 provided support. A decisive break below it would bring USD/JPY toward intermediate support at 147.50, followed by the round level of 147.00 and the horizontal zone around 146.70. Failure to defend these support levels would shift market dynamics in favor of the bears, exposing the August low near 146.20 before spot prices fall toward the round level of 146.00.