USD/JPY under pressure: All eyes on Bank of Japan rhetoric

The USD/JPY pair fell to 148.49, marking a third consecutive day of declines as markets digest mixed signals from the Bank of Japan.

The recently published summary of opinions from the September meeting revealed a divided policy committee. Some members advocated for further rate hikes, assuming current growth and inflation forecasts hold. Others, however, argued for maintaining low rates to help cushion the economy from the impact of new US tariffs.

Further highlighting the internal debate, one board member emphasised a wait-and-see approach, stressing the need to monitor global trade policy, the yen's exchange rate, and domestic price and wage dynamics. In contrast, another member noted that with over six months having passed since the last policy shift, it was time to consider another increase.

Weakening Japanese economic data added to the downward pressure. August retail sales fell 1.1%, missing forecasts for 1.0% growth and marking the first decline since February 2022. Industrial production figures also came in worse than expected.

Technical analysis: USD/JPY

Four-hour chart

On the H4 chart, USD/JPY formed a tight consolidation range around 148.80. Today's downside breakout has extended the correction, with the next target at 147.72. Upon reaching this level, we anticipate a potential new growth wave towards 149.95. This scenario is technically confirmed by the MACD indicator, whose signal line is above zero but pointing firmly downward.

One-hour chart

The H1 chart shows the pair completed a decline to 148.80 and consolidated around this level. The subsequent downside breakout has confirmed the continuation of the bearish wave structure towards 147.72. The Stochastic oscillator supports this view, with its signal line below 50 and falling sharply towards 20.

Conclusion

USD/JPY remains under pressure amid divergent signals from the BoJ and soft domestic data. While the near-term technical bias is bearish, the current decline is viewed as a correction within a broader uptrend, with the potential for a renewed upward move upon completion of the current wave.