26 September 2025,03:46
Daily Market Analysis
26 September 2025, 03:46
Key Takeaways:
*Subdued Tokyo Core CPI at 2.5% vs. 2.8% forecast dampened October rate hike expectations, extending yen weakness.
*The pair touched 149.95, edging close to the 150.00 level that often prompts Japanese authority vigilance.
*Strong 3.8% GDP and focus on today’s Core PCE inflation reinforce Fed-BoJ divergence, leaving yen vulnerable absent a policy shift.
Market Summary:
The Japanese yen extended its decline this week as market expectations for a Bank of Japan rate hike in October diminished following a series of disappointing inflation readings. The Tokyo Core CPI, released today, rose 2.5% year-on-year, falling short of the 2.8% consensus forecast and failing to provide the hawkish catalyst needed to reverse the currency’s bearish momentum. This followed Tuesday’s national CPI data, which also offered little impetus for policy tightening.
The yen’s weakness propelled USD/JPY to a high of 149.95, bringing the pair within striking distance of the psychologically significant 150.00 level—a threshold that historically raises the prospect of intervention by Japanese authorities. The currency faced additional pressure from stronger-than-expected U.S. economic data, with yesterday’s GDP report showing robust growth of 3.8%, reinforcing the divergence between Federal Reserve and BoJ policy trajectories.
Market attention now turns to today’s U.S. Core PCE inflation data—the Fed’s preferred gauge. A reading above consensus could further bolster the dollar’s yield advantage, potentially pushing USD/JPY above the 150.00 level and intensifying pressure on the yen. Conversely, a softer print may offer the yen temporary reprieve, though the underlying trend remains bearish absent a material shift in BoJ policy expectations.
The combination of subdued Japanese inflation and resilient U.S. economic performance has effectively delayed market expectations for BoJ policy normalization, leaving the yen vulnerable to further depreciation in the near term.
USDJPY, H4:
The USD/JPY pair has extended its advance, building on last week’s decisive breakout above the 148.85 resistance level with a further 0.6% gain. The sustained upward momentum reflects growing market conviction in the pair’s bullish trajectory, driven by widening interest rate differentials and subdued expectations for near-term Bank of Japan policy tightening.
The pair is now confronting significant psychological resistance near the 150.00 level—a threshold closely monitored for potential intervention by Japanese monetary authorities. A conclusive break above this barrier would signal a significant shift in market structure and likely open a path toward the next technical resistance zone near 151.20.
Momentum indicators remain strongly supportive of the bullish bias. The Relative Strength Index has advanced into overbought territory, indicating persistent buying pressure, while the Moving Average Convergence Divergence continues to trend higher above its zero line, confirming that upward momentum is accelerating.
Resistance Levels:151.20, 153.40
Support Levels: 148.85, 146.60
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