USDJPY: SELL 143.80, SL 144.20, TP 142.90 | 22 May 2025

USDJPY:

The Japanese yen (JPY) hit a new two-week high against a weaker US dollar (USD) during Wednesday's Asian session despite disappointing Japanese trade balance data. Investors are now convinced that the Bank of Japan (BoJ) will raise interest rates again in 2025 amid fears of broader and more entrenched price growth in Japan. These expectations were confirmed by “tough” comments from BoJ Deputy Governor Shin'ichi Uchida earlier this week, which continue to have a positive impact on the Yen exchange rate.

In addition, hopes of a trade deal between the US and Japan offset the overall positive risk-off tone and had little impact on the prevailing bullish sentiment around the safe-haven Japanese Yen. On the other hand, the US Dollar remains depressed amid growing confidence that the Federal Reserve (Fed) will further reduce borrowing costs, as well as an unexpected downgrade of the US government's sovereign credit rating. This contributes to the USD/JPY pair's decline towards 144.00 and supports the prospects for further downside in the near term.

Trading recommendation: SELL 143.80, SL 144.20, TP 142.90

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