USD/JPY Reverses Downwards: External Factors Reduce Support for the US Dollar

The reversal follows a broad weakening of the US dollar, triggered by former President Donald Trump’s remarks on the ceasefire between Israel and Iran, which he referred to as a "12-day war."

Markets largely dismissed Iran’s retaliatory strike on a US base in Qatar – which caused no casualties – while Tehran’s decision not to close the strategically vital Strait of Hormuz helped ease concerns over potential supply disruptions.

Domestically, investors continue to assess the Bank of Japan’s (BoJ) policy stance. At its June meeting, the central bank held the key rate at 0.5% but signalled readiness for further tightening, citing persistent core inflation driven by companies passing on higher wage costs to consumers.

Given the yen’s prolonged depreciation, a period of consolidation – if not a full recovery – now appears likely.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY broke above the 145.00 consolidation range, rallying to 148.00 before pulling back. We now see a corrective decline, with a potential retest of 145.00 (a technical pullback to the breakout level). Once this correction concludes, another upward wave toward 148.40 could develop, with a longer-term target at 149.00. This scenario is supported by the MACD indicator: its signal line remains above zero, having exited the histogram zone, suggesting a decline, at a minimum, back to the zero line.

H1 Chart:

On the H1 chart, USD/JPY completed an uptrend to 148.00 before forming a consolidation range near 146.50. A downside breakout could extend the decline toward 145.00, after which a new upward wave targeting 149.00 may emerge. The Stochastic oscillator aligns with this outlook, with its signal line below 20 and pointing firmly downward.

Conclusion

The yen’s rebound reflects both external dollar weakness and domestic policy shifts, with technicals suggesting near-term consolidation before potential renewed upside.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.