USDJPY pair is currently positioned for potential strength in the U.S. dollar, driven by contrasting economic fundamentals between Japan and the U.S. Japan's GDP growth rate is modest at 0.7%, with an annual contraction of -0.2%, signaling economic weakness, while inflation remains moderate at 2.8%. The Bank of Japan's ultra-low interest rate of 0.25% further weakens the yen as it contrasts sharply with the U.S. Federal Reserve's higher rates (5.25%), making USD assets more attractive. Japan's manufacturing sector is showing signs of contraction with a PMI of 49.8, while services remain in expansion at 53.7. The trade deficit and low consumer confidence in Japan, combined with relatively stronger U.S. growth, indicate that USD/JPY is likely to remain bullish, with the yen under continued pressure unless there is a major policy shift by the Bank of Japan.
Tip: The USD/JPY pair is likely to remain bullish as the U.S. Federal Reserve holds rates at 5.25% while the BOJ maintains its ultra-low 0.25% rate, favoring the dollar. The interest rate differential and Japan's loose monetary policy continue to put downward pressure on the yen, supporting USD strength. (USD/JPY may go bullish again very soon)
Technical Analysis:
USDJPY chart shows a potential bullish reversal forming at the pivot level of 140.822. If the price holds above this support, the pair could rally toward the targets of 148.604 and 151.144. A break below 138.882 could invalidate this bullish outlook. The current structure suggests a likely upward move in the near term.