USDJPY:
The dollar–yen pair has stabilized around 150.7, but the fundamental backdrop favors a downward correction. Falling US Treasury yields and persistent expectations of Fed policy easing narrow the rate differential that previously supported USD/JPY. Against this background, demand for the yen as a safe-haven asset tends to increase whenever the dollar shows signs of weakening.
Japan’s domestic agenda sends mixed signals: cabinet reshuffles and discussion of economic measures provide short-term support to equities, but for the exchange rate the key driver remains the trajectory of US Treasury yields and the risk of investor caution near levels that previously drew attention from financial authorities.
Given recent US rate commentary and the decline in global yields, the base case is a gradual move in USD/JPY toward 149.50, barring new factors that sharply improve the dollar backdrop. Risks to this view include unexpectedly restrictive signals from the US or a renewed rise in yields.
Trade recommendation: SELL 150.70, SL 150.90, TP 149.95
Origin: FreshForex
