USDJPY:
The dollar is strengthening against the yen amid firmer US macro data and higher Treasury yields. Markets are paring back expectations for swift and deep Fed cuts, directly supporting the dollar. The dollar index’s return to recent highs and solid US economic readings widen the yield differential in favor of the US—a key fundamental driver for USDJPY’s rise.
In Japan, inflation in the capital region remains above target; however, the Bank of Japan’s normalization remains gradual. Japanese government bond yields are rising only moderately and do not offset the advantage of US paper. This supports capital outflows toward dollar assets and weighs on the yen, especially while global investors maintain steady demand for the dollar amid geopolitical and trade uncertainties.
Markets remain alert to verbal signals from Japanese authorities near round levels, but the fundamentals—US yields, the resilience of US consumer spending, and the trajectory of Fed policy—still dominate. With neutral or stronger US releases, the probability of USDJPY retesting recent highs remains elevated.
Trade recommendation: BUY 149.75, SL 149.60, TP 150.60
Origin: FreshForex
