USDJPY: BUY 150.70, SL 150.15, TP 151.75 | 04 August 2025

An event to watch today:

01.08 15:30 EET. USD - Nonfarm payrolls

01.08 17:00 EET. USD - ISM Manufacturing Index

USDJPY:

The yen is weakening after the Bank of Japan meeting: the regulator kept the rate at around 0.50% and raised its inflation forecast, but signaled an extremely cautious path to further tightening — possible steps have been postponed to a later period, provided that the target price level is consistently achieved. This “dovish” risk ratio against the backdrop of high US rates supports the yield differential in favor of the dollar and stimulates demand for USD against JPY.

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Additional momentum for the pair comes from news out of the US: the Fed's decision to hold rates without hinting at an imminent reversal and the launch of new US tariffs have strengthened the dollar index and demand for dollar liquidity. At the same time, the Japanese authorities continue to intervene verbally, warning of undesirable exchange rate fluctuations, but no real measures have been taken yet, which allows the market to test higher levels for USDJPY.

The external environment remains mixed: industrial activity in Asia deteriorated in July, which is a medium-term challenge for Japanese exports. However, the partial reduction in tariff uncertainty following bilateral agreements with the US reduces the risk of sharp shocks to foreign trade. In these conditions, the priority is a “buy on dips” strategy, as long as the interest rate differential and news flow remain on the side of the dollar.

Trading recommendation: BUY 150.70, SL 150.15, TP 151.75

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