The yen continues to weaken under pressure, and the USD/JPY index tests the 147 mark
2025-07-11 13:41:08
Market expectations for a rate hike by the Bank of Japan (BoJ) this year have cooled significantly as US-Japan trade relations have become more strained and Japan’s domestic economic data has weakened. Japan’s real wages fell by a 20-month low in May, while producer prices showed inflationary pressures may be receding.
Against this backdrop, the already cautious Bank of Japan is more likely to choose a wait-and-see stance.

"The combination of weaker inflation and a downward trend in exports will significantly dampen the Bank of Japan's motivation to normalize its policy," said Keita Yamashiro, chief economist at the Tokyo Center for Economic Research, according to market research.
In addition, the market generally believes that the Bank of Japan may postpone its original policy exit plan, which will put continued selling pressure on the yen.
Political uncertainty in Japan has also added to the pressure on the yen. Recent polls show that the ruling coalition of the Liberal Democratic Party and the Komeito Party may lose its majority in the upcoming Senate election on July 20. Prime Minister Shigeru Ishiba expressed "deep regret" for Trump's tariff behavior, but stressed that he would continue to promote bilateral negotiations.
Japan plans to hold consultations with the U.S. Treasury Secretary on July 19 during the World Expo.
"The safe-haven properties of the yen are being weakened by domestic political risks." - According to market research, Singapore macro research firm EastSpring commented
The US dollar index remained strong, mainly benefiting from the relatively hawkish speeches of Fed officials recently and the solid performance of US labor market data. The latest initial jobless claims fell to 227,000, better than market expectations and the previous value, showing that the US job market is still resilient.
"Although some Fed officials support a rate cut in July, employment data and inflation trends still support the logic of maintaining high interest rates." - According to market surveys, Mary Daly, President of the San Francisco Fed, pointed out
Meanwhile, Fed Governor Waller said the inflationary effects of tariffs could be short-lived and interest rate decisions should not be driven by political motives.
From a technical perspective, USD/JPY has repeatedly tested the pressure above 147.00. If it breaks through, it is expected to further test the resistance of 147.60-147.65 in the short term, and it is not ruled out that it will challenge the previous high of 148.00.
Technical indicators are positive, with both MACD and RSI supporting further upside. The daily chart structure shows that buying continues to find support at the 100-hour moving average (currently around 146.20).
"As long as it stays above 146.00, the technical structure remains bullish, and a break below could open the door to a pullback to 145.00." - David Lu, a New York technical analyst, commented, according to market research

Editor's opinion:
The recent trend of USD/JPY shows a typical "strong dollar + weak yen" structure, with multiple resonances from fundamentals, technical aspects and policy aspects driving the market to accelerate. Rising trade concerns and the shaky domestic policies and economic confidence in Japan are weakening the traditional safe-haven role of the yen. The market will focus on the performance of inflation data before the Fed's July meeting and whether Japan's political situation will intensify.
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