25 September 2025,02:51
Daily Market Analysis
25 September 2025, 02:51
Key Takeaways:
*USD/JPY hit a September high of 148.91, while EUR/JPY trades near multi-year highs.
*Core BoJ CPI at 2.0% and BoJ minutes showing broad support for further hikes reinforce the case for rate normalization.
*Upcoming U.S. GDP, PCE inflation, and Tokyo CPI will be pivotal; a firm Tokyo CPI print could cement October hike expectations, potentially driving USD/JPY below 148.00.
Market Summary:
The Japanese yen continues to trade softly against G7 peers, with USD/JPY reaching a September high of 148.91 and EUR/JPY hovering at its highest level since July 2024. However, growing expectations for Bank of Japan policy normalization are likely to provide near-term support for the currency.
Recent data and policy communications have bolstered the case for an October rate hike. The latest BoJ Core CPI reading came in at 2.0%, exceeding consensus forecasts and reinforcing that inflationary pressures remain consistent with the central bank’s targets. Additionally, the recently released BoJ meeting minutes revealed that a majority of board members support further policy normalization, particularly now that trade-related risks with the U.S. have diminished. Members agreed that continued rate hikes would be appropriate if economic and price developments align with current projections.
Near-term direction will be influenced by key U.S. economic releases, including today’s GDP data and Friday’s PCE inflation report. Softer-than-expected U.S. data could weaken the dollar and amplify yen strength. Conversely, all eyes will be on Friday’s Tokyo CPI reading—a critical leading indicator for national inflation trends. A firm print there would likely solidify expectations for BoJ tightening in October, providing substantial support for the yen.
A conclusive break below 148.00 in USD/JPY would signal a meaningful reversal of the yen’s recent weakness, particularly if supported by hawkish BoJ signals and moderating U.S. economic indicators.
The USD/JPY pair is testing critical resistance near the 148.85 level, following a break above its recent sequence of lower highs—a technical development that suggests a potential bullish reversal within its five-week consolidation range between 146.55 and 148.85. A decisive breakout above this upper boundary would signal a resumption of the broader uptrend and likely trigger further momentum-driven buying.
The pair’s technical structure has improved notably, with buyers demonstrating increased conviction near the upper end of the multi-week range. A confirmed close above 148.85 would open the path toward the next significant resistance zone near the 150.00 psychological level, a threshold that has historically prompted close monitoring from Japanese monetary authorities for potential intervention.
Momentum indicators are aligning with the constructive price action. The Relative Strength Index is advancing toward overbought territory, reflecting strengthening upward pressure, while the Moving Average Convergence Divergence is showing early signs of rebounding above its zero line. This suggests that bullish momentum is re-emerging after a period of consolidation.
Resistance Levels:151.20, 153.40
Support Levels: 146.60, 144.90
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