USD/JPY. Price Analysis. Forecast. US Dollar Trending, Yen Lagging

On Thursday, the Japanese yen was losing ground against the US dollar, with the USD/JPY pair reaching its highest level in seven weeks. At the time of writing, trading was taking place around 149.88—continuing to rise for the second consecutive day, thanks to strong US economic data that is supporting demand for the dollar.

According to the Bureau of Economic Analysis, US GDP grew by 3.8% year-on-year in the second quarter, beating the preliminary estimate of 3.3% and surpassing market expectations. The growth was driven by strong consumer spending and a significant drop in imports. The core personal consumption expenditures (PCE) price index, included in the GDP report, rose 2.6%, slightly above the previous estimate and forecast of 2.5%.

Initial jobless claims for the week ending September 20 fell to 218,000—better than expectations at 235,000 and down from 232,000 the prior week. Durable goods orders also surprised to the upside: in August, new orders jumped 2.9%, far exceeding the 1.5% forecast and rebounding after a revised 2.7% drop in July.

These positive figures are boosting speculation that the Federal Reserve will continue to tread carefully with policy easing, limiting prospects for sharp rate cuts in the near future. After the US release, the CME FedWatch tool showed that the odds of a rate cut in October dropped to 85%, down from 94% before the data was released.

In Japan, the Bank of Japan's minutes released on Thursday show that Board members are inclined to resume rate hikes in the future. Many have noted that the US trade deal has reduced some economic uncertainty, although tariffs remain a focus due to their potential effects on the economy and prices.

These factors suggest the possibility of a near-term rate hike by the BOJ, offering some moderate support for the yen. Nevertheless, the upcoming LDP leadership election on October 4 may delay the move if a "dovish" candidate wins, which adds a layer of uncertainty and tempers bullish yen expectations amid concerns about US tariffs.

Technical Perspective:

Wednesday's overnight close above the 200-day simple moving average (SMA) for the first time since July 31 was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are positive, indicating that the path of least resistance remains upward for spot prices. The breakout above the 149.20 area, which marked the monthly high, confirms the constructive outlook and gives USD/JPY scope to aim for the psychological 150.00 level. A sustained move beyond this barrier would target the next big round number at 151.00, with intermediate resistance in the 150.65–150.75 zone.

On the other hand, any pullback toward the 200-day SMA could be viewed as a buying opportunity—albeit limited to that level. For the best trading setups, keep an eye on Friday's Japanese Tokyo core CPI release and on the US PCE (Personal Consumption Expenditures) data.