Long-term yen weakness persists due to Fed–BoJ policy divergence

Long-term yen weakness persists due to Fed–BoJ policy divergence and declining exports.

Technical analysis

USDJPY has formed a series of higher highs and higher lows, signaling the early stage of an uptrend. However, the strength of this trend remains uncertain, as each new high is followed by a pullback, indicating a fragile uptrend.
If the price holds above 147.00 and prints a higher low, it would reinforce the bullish structure, with the next upside target near the previous swing high at 151.00.
Conversely, a break below 145.70 would invalidate the bullish bias and could trigger a deeper decline toward the next support at 142.70.

Fundamental analysis
The easing of market concerns over retaliatory tariffs has recently supported a rise in USDJPY. However, weaker-than-expected U.S. nonfarm payroll data has fueled expectations of a more dovish Fed, placing short-term downward pressure on the dollar.
Nonetheless, the BoJ’s cautious and persistently dovish stance limits the yen’s long-term support, while ongoing yen carry trade activity continues to exert downward pressure on the currency in the medium term.
Additionally, Japan’s Jun export data showed a 0.5% YoY decline, the second consecutive monthly contraction, driven primarily by reduced exports of automobiles and steel. These declines reflect continued pressure from US import tariffs, particularly the 25% on Japanese cars, which remains a downside risk for the yen.

Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness

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