Date: 11th August 2025.


USDJPY Analysis: Yen Weakens Amid US Tariff Pressure and BOJ Policy Signals.



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The USDJPY currency pair has been in the spotlight after the Japanese Yen weakened against the US Dollar. This movement was triggered by several key factors that are currently attracting market attention. On Friday, USDJPY strengthened by +0.39%, indicating selling pressure on the Yen. The main concerns driving this weakening are the potential impact of US tariffs on the Japanese economy, as well as less than satisfactory domestic economic data.


Factors Driving Yen Weakening


Weaker Japanese Economic Data - Japanese household spending data for June, which only rose +1.3% (y/y), far below market expectations of +2.7%, sent a dovish signal. This figure suggests that Japanese consumers are holding back, likely due to US tariff pressure and rising inflation. This situation reduces pressure on the Bank of Japan (BOJ) to raise interest rates soon.


Rising US Bond Yields - Higher US government bond yields on Friday made the US dollar more attractive to investors. This increase negatively impacted the yen, known as a safe-haven currency.


Hawkish Sentiment from BOJ Meeting: Hope Amid Challenges


Nevertheless, there are several signals that could potentially be positive catalysts for the yen in the long term.


Slightly Hawkish BOJ Meeting Minutes - The minutes of the July 30-31 BOJ meeting showed differences of opinion among board members. Some suggested gradual interest rate hikes to anticipate future inflationary pressures. One member even hinted at the possibility of a rate hike as early as late 2025, depending on the impact of US tariffs.


Positive Signals from Economic Surveys - The EcoWatchers Japan Outlook Survey rose to 47.3 in July, reaching a six-month high. This reading was stronger than expected, indicating optimism among economic observers. This positive signal could be a bullish boost for the Yen.


USDJPY Technical Analysis: Towards Key Levels


Technically, the USDJPY is in a corrective phase. The significant rise from the 2021 low (102.58) towards the 2024 high (161.94) is seen as the main trend.



USDJPY


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Key Upside Level: If USDJPY manages to break through minor resistance at 148.07, the market will likely retest the high of 150.91, or the 61.8%FR level. A rise above this level would open the opportunity for a continuation of the bullish trend to higher levels.


Key Downside Level: On the other hand, key support is at 145.84. A breach of this level could signal a short-term bearish reversal, with the next support target at 142.66.


For next week, the Yen's movement will likely be influenced by external data given the relatively quiet Japanese economic calendar.


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Please note that times displayed based on local time zone and are from time of writing this report.


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Ady Phangestu
HFMarkets


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