Introduction

The USD/JPY pair remains a focal point for traders as policy divergence between the Federal Reserve and the Bank of Japan widens. The yen continues to face downward pressure from ultra-loose monetary settings, while robust US data sustains demand for the dollar. With technicals pointing higher, the pair looks set to extend gains toward key resistance.

Fundamental Analysis

The United States shows strong economic momentum, with GDP growth and retail demand resilient. Inflation is moderating but remains close enough to target to justify the Fed’s “higher-for-longer” policy stance. Labour market stability and solid PMI readings further underpin the dollar.
In contrast, Japan faces stagnant growth, ultra-low inflation, and an overwhelming debt burden. The Bank of Japan maintains its accommodative stance, with policy rates anchored near zero, leaving the yen at a persistent yield disadvantage. These fundamentals reinforce dollar strength over the yen.

Sentiment Analysis

Positioning data shows investors increasingly long USD against JPY, with speculative flows aligned to the prevailing policy divergence. Retail sentiment reflects a continuation of dollar strength, while institutional futures data also suggests growing bearishness on the yen. The overall sentiment score for USD/JPY sits at +20, signalling strong bullish conviction.

Technical Analysis

Daily Ichimoku charts show USD/JPY trading firmly above the cloud, with the conversion line above the base line, a clear bullish signal. RSI sits near 57, showing positive momentum without overbought conditions. MACD has turned higher, with a bullish crossover forming. Key support lies at 146.50, with resistance at 149.50. A sustained break above 149.50 could open the door toward 152.00.

Conclusion

The USD/JPY outlook remains bullish, supported by strong US fundamentals, dovish Japanese policy, and favourable sentiment. Technicals confirm upside momentum, with scope for further gains if resistance breaks. Traders may look to position long USD/JPY while monitoring Fed communications and Japanese intervention risks.