The pair trades around 147.4. Last week the yen firmed after political headlines from Tokyo: the prime minister’s resignation increased uncertainty and supported safe-haven demand for JPY. At the same time, US yields pulled back on softer labor data and a mild PPI, narrowing the rate differential in the dollar’s favor.
On Japan’s side, debate has revived about further BoJ normalization as wages rise and inflation stabilizes. Even if the BoJ leaves settings unchanged at the next meeting, the risk balance is shifting from one-sidedly dovish toward more neutral, which limits USD/JPY upside as a Fed cut appears likely.
The combination of a prospective Fed cut on Wednesday and elevated political noise in Japan makes further downside drift plausible. We prefer selling at 147.50 with a 146.00 target and a 148.50 stop. A “hawkish” Fed reaction and/or an ultra-cautious BoJ could push the pair back toward 148+.
Trading recommendation: SELL 147.50, SL 148.50, TP 146.00
Origin: FreshForex
