USDJPY is under pressure amid expectations of tighter BoJ monetary policy

The USDJPY pair is rising, with the price currently at 148.40. Discover more in our analysis for 12 March 2025.

USDJPY forecast: key trading points

• Japan’s business sentiment index for large manufacturing companies decreased
• Weak statistics may heighten expectations of further BoJ monetary tightening
• USDJPY forecast for 12 March 2025: 145.65

Fundamental analysis

The USDJPY rate is rising for the second consecutive session, with buyers aiming to test the crucial resistance level at 148.50. The US dollar is gaining support amid expectations of the latest inflation data.

Despite the current growth, the currency pair remains under pressure due to uncertainty in Trump’s tariff policy and increasing risks of the US recession. The yen receives additional support from rising wages in Tokyo, which helps offset inflationary costs, reduce the labour shortage, and increase consumer spending, creating conditions for a possible Bank of Japan interest rate hike.

Meanwhile, Japan’s business sentiment index for large manufacturing companies declined to -2.4% in Q1 2025 after rising to 6.3% in the previous quarter. The deterioration of the indicator and weak statistics could fuel expectations for further BoJ monetary tightening, which supports a bearish forecast for USDJPY for today.

USDJPY technical analysis

The USDJPY rate remains within a descending channel. The USDJPY forecast for today expects the price to rebound from the 148.55 resistance level and fall to 145.65. Technical indicators confirm the bearish scenario, with the Moving Averages signalling a downtrend and the Stochastic Oscillator reaching the overbought area and bouncing off the descending trendline. A breakout below the lower boundary of the ascending channel will confirm the bearish momentum, with the price consolidating below 147.35.

Summary

Despite the short-term gains, the USDJPY currency pair remains under pressure amid rising expectations for further BoJ monetary tightening. The USDJPY technical analysis indicates a continued downtrend, and a breakout below the 147.35 level will confirm the bearish momentum, with a target at 145.65.