USDJPY: SELL 147.30, SL 147.50, TP 146.00 | 26 July 2025

Event to watch today:

25.07 15:30 EET.USD - Change in orders for durable goods

USDJPY:

The yen is strengthening for the fourth consecutive session, supported by both domestic and external factors. This week’s US–Japan trade deal has reduced geopolitical uncertainty and created expectations that the Bank of Japan could begin moderate policy tightening by year-end.

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Another factor is the slow-down in Tokyo inflation to 3.3%, which eases pressure on real household incomes, while the trade balance surplus remains stable. At the same time, the yield spread between 10-year JGBs (about 1.05%) and their US counterparts narrowed by 10bps during the week, partially reducing the dollar’s appeal.

On the other hand, Powell’s “hawkish” remarks are limiting the pair’s decline, though signs of possible verbal intervention from Japan’s Ministry of Finance above 147 are making speculators more cautious. In this fundamental context, a correction toward 145 looks likely, especially if US jobless claims beat expectations and fuel safe-haven demand for the yen.

Trade recommendation: SELL 147.30, SL 147.50, TP 146.00

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