USDJPY: BUY 147.60, SL 147.10, TP 148.50 | 16 July 2025

Event to watch today:

15:30 EET. USD - Consumer Price Index

USDJPY:

The yield on 10‑year Japanese Government Bonds has climbed to 1.59 %—the highest since 2008—but the yen remains under pressure: the Fed’s policy rate is far higher and U.S. Treasury yields hover near 4.4 %. This wide differential keeps demand for dollars intact; the pair is holding around 147.6 after bouncing off support at 147.1 and is eyeing another test of 148.0.

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In the near term, investors are weighing political risks: upcoming upper‑house elections could usher in a more aggressive fiscal agenda and higher borrowing needs, putting fresh strain on Japan’s bond market. At the same time, the Bank of Japan continues to drag its feet on balance‑sheet reduction and remains cautious about hiking the policy rate, keeping real yields negative and undermining the yen’s safe‑haven appeal.

External factors also favour a stronger USDJPY: U.S. trade frictions with major partners are bolstering demand for the dollar, and a likely uptick in U.S. inflation today could intensify that trend. The move toward 148.50 remains on the cards, while the main risks to the scenario are a possible verbal intervention from Japan’s Ministry of Finance or a surprisingly weak U.S. CPI reading.

Trading recommendation: BUY 147.60, SL 147.10, TP 148.50

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