USDJPY: BUY 148.50, SL 147.50, TP 149.50 | 22 July 2025

An event to watch out for today:

21.07 17:00 EET. USD - Leading Indicators Index

USDJPY:

The pair opened the week near 148.50, clawing back ground after Sunday’s upper‑house election saw Japan’s ruling LDP‑Komeito coalition lose its majority. The outcome clouds the fiscal outlook and raises the probability of additional stimulus, a combination that tends to undermine the yen as investors anticipate higher public borrowing and a looser policy mix.

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At the same time, subdued inflation and stagnant real wages have pushed expectations of Bank of Japan tightening into late‑2025 at the earliest. With the 10‑year US‑Japan yield gap hovering near yearly highs, capital continues to flow from low‑yielding JGBs into higher‑yielding US assets, reinforcing dollar demand against the yen.

Dollar strength is also underpinned by persistent tariff worries and a Federal Reserve that maintains a cautious stance rather than rushing to cut rates. Given these fundamentals, USDJPY could retest the psychological 150.00 barrier, while dips below 147.50 are likely to be viewed by the market as opportunities to re‑establish long positions rather than the start of a deeper correction.

Trading recommendation: BUY 148.50, SL 147.50, TP 149.50

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