Insights 
VT 
Key Points:
- USDJPY fell 0.6% to 148.62 after touching a high of 149.527, driven by a firmer yen post-BOJ decision.
- BOJ held rates at 0.5% but raised its inflation outlook, signalling possible hikes later in the year.
The Japanese yen firmed sharply on Thursday following the Bank of Japan’s decision to maintain rates while raising its inflation outlook. USDJPY dropped 0.6% to 148.62, with the pair closing at 148.760 after opening at 149.444. The intraday high reached 149.527 before reversing lower.
The move reflected a sharp reaction to the BOJ’s more hawkish tone. Although the central bank held short-term interest rates at 0.5% by unanimous vote, the upgraded inflation projection suggests policymakers are laying the groundwork for a potential rate hike later this year—especially if Japan’s trade deal with the U.S. helps offset the economic drag of recent tariffs.
This price action unfolded during a packed 24-hour news cycle. While the BOJ signalled greater optimism, markets also processed the Federal Reserve’s decision to keep rates steady for a fifth consecutive meeting.
Although the Fed paused, Chair Jerome Powell’s tone undercut expectations for a September rate cut, helping the dollar hold steady despite mixed economic signals.
Meanwhile, President Trump continued his aggressive trade agenda. A new U.S.-South Korea deal was announced, including a 15% tariff on Korean imports. South Korea, in return, committed to $350 billion in U.S. investments and $100 billion in energy purchases.
Trump also set a 25% tariff on Indian goods and slapped a hefty 50% tariff on copper pipes and wiring, although the lack of broader restrictions led to a 19% collapse in copper futures.
Despite this, U.S. equities were boosted by strong earnings. Nasdaq futures surged 1.2% on upbeat results from Microsoft and Meta, while the S&P 500 futures rose 0.8%.
Technical Analysis
The pair found intraday support around the 147.80 level on 30 July before rebounding strongly through the Asian and European sessions. A clear bullish leg lifted USDJPY to an intraday high of 149.527, forming a near-perfect double-top pattern as price failed to sustain above that resistance zone. This failure sparked a pullback to the 148.60–148.70 region by 31 July.
The moving averages (5, 10, 30) initially supported the uptrend but have since begun flattening and crossing downward, particularly the shorter-term lines, signalling a weakening of bullish momentum.
Picture: USDJPY pulls back from 149.50 as momentum stalls near resistance, as seen on the VT Markets app
The MACD confirms this shift, with the histogram transitioning from green to red and the MACD line crossing below the signal line. The bearish crossover suggests further downside pressure may follow, especially if price slips below 148.60. The next immediate support is seen at 147.88, which also marked the last swing low.
On the fundamental front, traders are treading cautiously ahead of any shifts in US Treasury yields and possible intervention talk from Japanese officials, who may grow concerned about the yen’s depreciation beyond 149.
A bounce from current levels would need to reclaim 149.00 convincingly to resume the bullish trend. Until then, consolidation or further retracement toward the 147.80 support base appears more likely in the near term.
Cautious Forecast
USDJPY may stabilise near the 148.50–148.60 band, with support at 147.88. A dovish BOJ shift in future meetings would limit yen gains, but for now, the tone suggests the currency may continue to strengthen. Resistance remains near 149.50.
Traders should remain cautious as U.S. trade policy continues to evolve rapidly.
