USDJPY: SELL 150.50, SL 151.50, TP 149.00 | 26 February 2025

Event to pay attention to today:

17:00 EET. USD - CB Consumer Confidence

USDJPY:

The Japanese yen (JPY) declined for the second consecutive day, which together with a further recovery in the US dollar (USD) from more than two-month lows lifted the USD/JPY pair above the psychological 150.00 mark during Tuesday's Asian session. Bank of Japan Governor Kazuo Ueda said last week that the central bank is ready to increase government bond purchases if long-term interest rates rise sharply. This triggered a corrective pullback in Japanese government bond (JGB) yields and led to some selling in the yen. However, Bank of Japan (BoJ) expectations may continue to serve as a tailwind for the yen.

Investors seem convinced that the BoJ will raise interest rates further amid signs of rising inflation in Japan. Rates were confirmed by Japan's service producer price index (PPI) released earlier today. This, along with strong Japanese consumer inflation data, supports the outlook for further BOJ policy tightening and should help limit deeper JPY losses. In addition, disappointing US PMI data on Friday, as well as concerns over the potential economic impact of US President Donald Trump's import tariffs, may deter USD bulls from aggressive bets and limit further USD/JPY strength.

Trade recommendation: SELL 150.50, SL 151.50, TP 149.00

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