USDJPY:
The pair is trading in the 147–148 range, but fundamental factors are tipping the balance of risks in favor of a stronger yen. Expectations of an imminent Fed rate cut are weakening support for the dollar through the yield channel. In addition, the US and Japan have confirmed their commitment to “market-determined” exchange rates and the unacceptability of “excessive volatility,” which de facto leaves Tokyo room for maneuver in the event of sharp movements and limits the enthusiasm of USD buyers on the upswing.
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Domestically, Japan is seeing increasing signs of stable inflation: accelerating wholesale prices and widespread wage growth are increasing the likelihood of cautious tightening by the Bank of Japan at the end of the year. At the same time, the BoJ itself is expected to maintain a pause for now, leaving the market with a “hawkish” option tail. Against this backdrop, the short-term bias is towards a gradual decline in USDJPY.
Base scenario for today: sales from rounded levels with clear risks — SELL 147.50, SL 148.10 (above the zone of potential “spikes” on the news), TP 146.50 — while maintaining soft expectations for the Fed and signals of readiness from the Japanese authorities to smooth out excessive movements.
Trading recommendation: SELL 147.50, SL 148.10, TP 146.50
