USDJPY is under pressure amid expectations of a BoJ rate hike

The USDJPY rate is declining for the fourth consecutive trading session, with the price currently at 152.44. Discover more in our analysis for 6 February 2025.

USDJPY forecast: key trading points

• Expectations of another Bank of Japan interest rate hike are rising
• Data showed Tokyo wages rose by 0.6% in December
• Japan’s nominal wages reached the highest level in nearly 30 years
• USDJPY forecast for 6 February 2025: 150.75 and 149.40

Fundamental analysis

The USDJPY rate fell to an eight-week low amid expectations of another Bank of Japan interest rate hike. Minister of Finance Katsunobu Kato said that inflation could rise further, increasing the likelihood of monetary policy tightening and driving the current decline in the currency pair.

Additionally, the latest data showed strong wage growth, with Tokyo’s figures rising for the second consecutive month, up 0.6% in December, while analysts expected a 0.7% decline. Nominal wage growth hit the highest level in nearly 30 years, adding to inflationary pressures.

These factors strengthen expectations that the Bank of Japan will continue to raise interest rates in 2025. The increasing contrast with the Federal Reserve’s forecasts of two rate cuts before the end of the year may support the yen’s strength as part of today’s USDJPY forecast.

USDJPY technical analysis

The USDJPY rate remains in a stable downtrend, with selling pressure increasing after a breakout below the lower boundary of a Triangle pattern. The bearish momentum persists, which is confirmed by the lack of a test of the EMA-65 after the pattern has been completed. Today’s USDJPY forecast suggests a short-term rise to the upper boundary of the descending channel at 152.95 followed by a potential decline to 149.40. A breakout below the lower boundary of the descending channel will confirm the bearish scenario, with the price consolidating below 150.75.

The Stochastic Oscillator analysis also indicates potential corrective growth before a fall. The indicator values have exited the oversold area, and the %K and %D lines crossed from bottom to top, forming a signal for an upward movement. However, given the general bearish trend in the USDJPY pair, the current correction will be short-lived. Once the Stochastic Oscillator values reach the resistance level, the price could reverse and maintain its downward trajectory.

An alternative scenario is possible if buyers can break above the upper boundary of the descending channel and consolidate above 153.30. In this case, growth may continue to the next significant resistance level at 154.05.

Summary

The yen continues to strengthen amid expectations of a Bank of Japan rate hike and mounting inflationary pressures. The currency pair’s decline is supported by the contrast with the Fed’s rate-cutting policy. The USDJPY technical analysis shows that the price remains in a downtrend, with a short-term correction towards 152.95 likely before a fall to the 150.75 and 149.40 levels. An alternative scenario is possible only if the price breaches the 153.30 level and consolidates above it.