Introduction

USD/JPY remains a compelling long opportunity, supported by strong US fundamentals and a dovish Bank of Japan. While the pair faces short-term resistance and a corrective pullback on lower timeframes, the broader trend continues to favour dollar strength. Traders should watch for tactical dips to re-enter in line with the prevailing macro backdrop.

Fundamental Analysis

The US economy continues to post robust growth, with GDP up 3.3% quarter-on-quarter and annual expansion at 2%. Inflation remains above 2.7%, keeping the Federal Reserve in a restrictive stance with rates at 4.5%. Labour market resilience supports this policy bias.
Japan’s picture is weaker. Growth remains sluggish at 0.3%, inflation is muted at 3.1% year-on-year, and the Bank of Japan maintains ultra-loose policy with rates near 0%. Debt levels above 230% of GDP limit fiscal flexibility, while trade remains under pressure. This divergence cements yen weakness against the dollar.

Sentiment Analysis

Positioning data show USD sentiment moderately positive, while JPY remains weak. Commitment of Traders reports indicate speculative long positions in yen, but price action suggests those are under strain. Retail sentiment skews towards selling USD/JPY, providing contrarian support for further gains. The sentiment model scores the pair at +15, reinforcing a bullish stance.

Technical Analysis

• Daily View: USD/JPY is consolidating above the Ichimoku cloud, with key resistance at 148.5. MACD has turned positive and RSI is neutral around 50, signalling potential for renewed upside momentum.
• 4H View: Price faces resistance at 147.9–148.0, where both the conversion line and cloud base converge. RSI at 41 and MACD negative confirm short-term bearish momentum. Strong support sits at 147.0 and 146.5.
• Setup: Tactical traders may short toward 147.0–146.5, but strategic bias favours buying dips at these levels, targeting 148.5 and 150.

Conclusion

USD/JPY offers a dip-buying opportunity as short-term weakness contrasts with a bullish macro and daily technical backdrop. A move toward 147.0–146.5 would provide an attractive entry zone for longs. A daily close above 148.5 would confirm continuation higher, with 150 as the next target.