The Japanese yen declined against the U.S. dollar for the second consecutive day on Monday. The drop came as investors speculated that the Bank of Japan (BOJ) might pause further interest rate hikes this year. A broadly positive mood in global stock markets also reduced demand for the yen, which is traditionally seen as a safe-haven asset.
Geopolitical Risks Still Support Yen Strength
Despite the yen’s short-term weakness, ongoing global risks continue to support the currency. Heightened geopolitical tensions in the Middle East and uncertainty over global trade are creating bullish conditions for the yen in the medium term.
Inflation Outlook May Limit Yen’s Losses
Rising inflation in Japan and growing belief that the BOJ will continue its policy normalization may help stabilize the yen. Some selling pressure on the U.S. dollar is also emerging, which could prevent the USD/JPY pair from rising significantly in the near term.
Market Caution Ahead of Key Central Bank Meetings
Traders are likely to remain cautious ahead of major central bank decisions this week. The BOJ is set to announce its policy decision on Tuesday, followed by the U.S. Federal Open Market Committee (FOMC) on Wednesday. These events could shape short-term market direction.
USD/JPY Faces Key Resistance at 145.00
From a technical standpoint, USD/JPY is struggling to break above the 144.75 level, which marks the upper boundary of its recent trading range. A clear move past the psychological barrier of 145.00 could trigger further buying, potentially lifting the pair to the monthly high near 145.45. Continued momentum may drive prices toward 146.00 and possibly up to the 146.25–146.30 region, last seen on May 29.
Support Levels May Attract Buyers on Pullbacks
On the downside, the 144.00 level appears to offer immediate support. If the pair falls below this point, it may find buying interest near 143.55–143.50. A break below that region could lead to a decline toward the 143.00 mark, followed by Friday’s low around 142.80–142.75. A failure to hold above the 142.00 lower boundary of the range would signal a possible resumption of the broader downward trend seen since the May peak.
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