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16 September 2025,07:27
Daily Market Analysis
16 September 2025, 07:27
*The currency gained modestly on safe-haven flows as geopolitical tensions in Eastern Europe and the Middle East drove investors toward defensive assets.
*Markets expect the Bank of Japan to keep rates unchanged on Friday, though the narrowing Fed–BoJ policy gap has helped buoy sentiment.
*Strong wage growth and steady inflation fuel hopes for a BoJ rate hike by year-end, supporting prospects for further yen strength.
Market Summary:
The Japanese yen is trading with a firmer bias against major currencies ahead of the Bank of Japan’s monetary policy decision on Friday, supported by safe-haven demand and a softening U.S. dollar. Geopolitical tensions in Eastern Europe and the Middle East have prompted flows into traditional避险 assets, while expectations of a narrowing interest rate differential between the Federal Reserve and the BoJ are providing additional support.
Market participants are broadly anticipating the BoJ will maintain its current policy settings at this week’s meeting, extending its conservative approach amid still-moderate inflationary pressures and fragile economic momentum. This expectation is likely to limit significant yen appreciation in the immediate term.
However, longer-term sentiment toward the yen is improving, with a growing consensus that the central bank could initiate a new rate hike cycle by the end of 2025. Sustained wage growth and inflation trends nearing the BoJ’s target are expected to eventually support further policy normalization, marking a departure from the decades-long ultra-accommodative stance that has weighed on the currency.
The yen’s near-term trajectory will also be influenced by the Federal Reserve’s upcoming policy decision, with a dovish outcome likely to enhance the appeal of Japanese assets. Should the BoJ surprise markets with a more hawkish tone or upgraded economic assessments, the yen could extend gains beyond current levels.
Technical Analysis
USDJPY, H4:
The USD/JPY pair is testing critical technical support near the 146.45 level after forming a double-top pattern near the 148.80 resistance zone—a development that often signals a reversal in momentum. A sustained break below this support level, which has held for approximately two months, would confirm a bearish shift in market structure and likely open the path toward deeper losses, with the next significant support seen near the 145.00 psychological level.
The pair has established a sequence of lower highs following its rejection at resistance, indicating weakening upward momentum. This price action reflects a combination of factors, including a modest rebound in the yen amid broader U.S. dollar softness and elevated geopolitical uncertainty supporting demand for traditional safe-haven assets.
Momentum indicators currently offer limited directional guidance. The Relative Strength Index is fluctuating near its midline, reflecting a neutral near-term bias, while the Moving Average Convergence Divergence is oscillating around its zero line, failing to provide a clear bullish or bearish signal. This technical indecision suggests the pair may be approaching a inflection point.
Resistance level:148.80, 151.00
Support level: 146.45, 144.85
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