Lately, all eyes are on the USD/JPY exchange rate. Since early this month, the pair has been finding a base around the 140 level, sparking speculation about a potential trend reversal. Recent price action suggests early signs of a rebound, making the coming weeks key in assessing its momentum.
One major factor behind the yen’s weakness has been the yield movement of Japanese government bonds. The latest figures show that 30-year bond yields have fallen to their lowest levels since early May. This points to strong demand for long-dated bonds, which suppresses overall interest rates and, in turn, dims the yen’s appeal. As a result, the US dollar has risen to near 143.50 against the yen.
External factors have also weighed in. Reports that the U.S. may delay proposed tariffs on the EU reduced safe-haven demand, adding further pressure on the yen. That said, concerns over the U.S. fiscal outlook and long-term interest trends remain, with many investors still anticipating possible Fed rate cuts in 2025. This has somewhat capped the dollar’s strength.
Technically, USD/JPY is hovering at a pivotal area shaped by both technical resistance and fundamental factors. While still trading within a downward channel formed over the past few months, the pair is pressing against the 143.35 resistance zone. A solid break above 144.45 could pave the way toward the 146.35 level and beyond. Conversely, a drop below 141.65 would likely signal a renewed downtrend.
In short, the formation of a base around 140 appears to be taking shape, suggesting potential upside in the near term. However, given ongoing global policy uncertainty and upcoming key economic releases, it may be wise for investors to wait for clearer technical confirmation or stronger fundamental support before taking decisive action. Any sustainable recovery will ultimately require a stronger dose of market confidence.
