USDJPY:
The pair has retreated from recent multi-month highs amid stronger demand for safe assets and a series of remarks from Japanese authorities. Official statements about closely monitoring the exchange rate and avoiding excessive volatility are capping dollar buying against the yen. In this context, participants have been taking profits after the jump above 154, pushing the pair back toward the 153 area.
Japan’s domestic backdrop is gradually shifting: inflation remains above target, supporting expectations for further normalization by the Bank of Japan—even if without abrupt steps. Even modest signs of tighter financial conditions in Japan, together with global volatility and periods of risk aversion, increase the propensity for yen strength in the short term.
From the US side, the picture is mixed: firm services components support the dollar, but budget risks and bouts of “risk-off” can pull yields lower, creating a headwind for USDJPY. In these conditions, the likelihood of a correction from stretched levels is elevated, arguing for a cautious selling approach with tight risk control.
Trading recommendation: SELL 153.25, SL 154.50, TP 152.50
Origin: FreshForex
