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Published: 12 October 2026,05:21
Daily Market Analysis New
*USD/JPY remained range-bound as Japanese markets were closed for the Sports Day public holiday, resulting in relatively subdued trading conditions.
*Markets expect the Bank of Japan to maintain rates at its October 29–30 meeting, with another hike more likely in December or January.
*Expectations for further BoJ tightening continue to provide underlying support for the Japanese Yen, with markets anticipating the policy rate could eventually rise toward 1.75% by March or April.
USD/JPY remained range-bound as trading activity stayed subdued with Japanese markets closed for the Sports Day public holiday, leaving investors with limited conviction on near-term direction.
Focus is gradually shifting toward the Bank of Japan’s October 29–30 meeting. Policymakers are expected to review fresh third-quarter data, with resilient exports offering some support to the economy while elevated costs continue to weigh on businesses and households. However, after September’s rate increase, another immediate hike appears unlikely.
BoJ Governor Kazuo Ueda has continued to signal a gradual approach to policy normalisation rather than the aggressive tightening seen in the U.S. and Europe in 2022. Markets currently expect the policy rate to rise from 1.25% to 1.50% in December or January, with another move toward 1.75% potentially following in March or April, keeping some underlying support for the Yen.
Meanwhile, the U.S. Dollar came under mild pressure as weaker crude oil prices helped ease inflation concerns and pulled Treasury yields lower, reducing some of the rate-driven support for the greenback.
Attention now turns to upcoming U.S. CPI and PPI data. Stronger inflation could lift Treasury yields and support USD/JPY, while softer readings may reinforce a less hawkish Fed outlook and increase downside pressure on the pair.
USD/JPY, H4:
USD/JPY is trading higher, currently testing the 158.40 resistance level, which acts as a key near-term breakout zone.
Market attention remains focused on a potential breakout above 158.40. A confirmed break could extend gains toward the next resistance level at 159.05, reinforcing the bullish short-term structure.
However, momentum indicators suggest caution. The MACD is showing increasing bearish momentum, while the RSI at 50 has retreated from higher levels toward the midline, indicating that upside momentum may be weakening.
If bullish momentum fails to persist, USD/JPY may experience a short-term technical correction and retest the 157.75 support level, followed by 157.15 if selling pressure increases.
Resistance Levels: 158.40, 159.05
Support Levels: 157.75, 157.15
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