The weak yen and the rebound of the US dollar have pushed USD/JPY to challenge the 147 mark in the short term.
2025-09-18 11:04:55
The latest data showed that Japan's core machinery orders fell 4.6% month-on-month in July, far below market expectations, and the year-on-year growth rate also slowed from 7.6% in June to 4.9%. This weak data suppressed the performance of the yen.
At the same time, the Federal Reserve announced its first interest rate cut since December last year, lowering the federal funds rate by 25 basis points to a range of 4.00%-4.25%, and hinted that there will be two more rate cuts this year.
"Inflation risks remain tilted to the upside," Federal Reserve Chairman Powell emphasized at a press conference after the meeting.
As soon as this statement was made, there was a clear short-covering in the US dollar, pushing USD/JPY to rebound rapidly by more than 150 points from the 145.50 area.
Despite the short-term weakness of the yen, the market generally believes that the Bank of Japan is still expected to raise interest rates this year. With the recent US-Japan trade agreement reducing some growth risks, coupled with Japan's tight labor market and rising inflation, market bets on policy normalization have increased, becoming the key to limiting the yen's significant depreciation.
The daily chart shows that USD/JPY fell below the 146.20 support level on Wednesday, but it was quickly proved to be a false breakout and subsequently recovered the 147 level.
In terms of indicators, MACD and RSI have not yet fully confirmed the strong trend, and the bullish momentum still needs to be verified. The upper resistance is in the range of 147.40-147.50. If it breaks through, it will further point to 148.00 and the 200-day moving average of 148.75, and even reach the monthly high of 149.00-149.15.
The lower support level is around 146.20 and 146.00. Once it falls below, it may accelerate its decline to the 145.50-145.00 area.
Editor's opinion:
In the short term, the US dollar is supported by the Fed's rebalancing after the rate cut, but the Japanese yen's medium-term support lies in expectations of Bank of Japan rate hikes and its safe-haven nature. USD/JPY is expected to fluctuate between 146.00 and 148.00, with further upside potential only possible if it breaks through the upper limit of the range.
At the same time, the Federal Reserve announced its first interest rate cut since December last year, lowering the federal funds rate by 25 basis points to a range of 4.00%-4.25%, and hinted that there will be two more rate cuts this year.
"Inflation risks remain tilted to the upside," Federal Reserve Chairman Powell emphasized at a press conference after the meeting.
As soon as this statement was made, there was a clear short-covering in the US dollar, pushing USD/JPY to rebound rapidly by more than 150 points from the 145.50 area.
Despite the short-term weakness of the yen, the market generally believes that the Bank of Japan is still expected to raise interest rates this year. With the recent US-Japan trade agreement reducing some growth risks, coupled with Japan's tight labor market and rising inflation, market bets on policy normalization have increased, becoming the key to limiting the yen's significant depreciation.
The daily chart shows that USD/JPY fell below the 146.20 support level on Wednesday, but it was quickly proved to be a false breakout and subsequently recovered the 147 level.
In terms of indicators, MACD and RSI have not yet fully confirmed the strong trend, and the bullish momentum still needs to be verified. The upper resistance is in the range of 147.40-147.50. If it breaks through, it will further point to 148.00 and the 200-day moving average of 148.75, and even reach the monthly high of 149.00-149.15.
The lower support level is around 146.20 and 146.00. Once it falls below, it may accelerate its decline to the 145.50-145.00 area.
Editor's opinion:
In the short term, the US dollar is supported by the Fed's rebalancing after the rate cut, but the Japanese yen's medium-term support lies in expectations of Bank of Japan rate hikes and its safe-haven nature. USD/JPY is expected to fluctuate between 146.00 and 148.00, with further upside potential only possible if it breaks through the upper limit of the range.
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