USD/JPY Rises Above 148 – Is 150 the Next Target?

The USD/JPY has broken above the 148.00 level during the European session due to US-China trade optimism and a hawkish Fed. These combined forces have taken the pair to its highest levels since early April and the breakout above 148 is a big deal, so if this momentum holds the pair could be looking higher.

Why the Dollar is Beating the Yen

Several things are driving the dollar higher against the yen:

• US-China Trade Deal: The recent trade deal which includes a 90 day tariff suspension by China and a 10% base tariff on Chinese goods by the US has eased global trade tensions and lifted risk appetite and the dollar.

• Hawkish Fed: The Fed pausing rate cuts and being hawkish has added to the dollar’s strength. The Fed is tightening while the BoJ is dovish and that’s widening the interest rate gap in favor of the dollar.

• Japan’s Economic Issues: Weak household spending and sluggish wage growth in Japan is weighing on the yen and adding to the USD/JPY pair’s upside. The BoJ is being cautious with tightening despite rising inflation and that’s leaving the yen vulnerable to further downside.

Technical Analysis: Key Levels to Watch

The USD/JPY is trading within an ascending channel and the recent move above the 50 EMA at 145.76 confirms the bullish trend. The MACD is expanding positively and that’s a sign of sustained buying.

Key levels to watch:

• Immediate Resistance: 149.46 (upper channel boundary)

• Next Resistance: 150.57 (breakout target)

• Immediate Support: 147.95 (breakout level)

• Next Support: 146.90 (lower channel boundary)

Trade Setup

• Entry Point: Buy around 147.95 above the 50 EMA at 145.76.

• Take Profit (TP): 149.46, then 150.57 if momentum continues.

• Stop Loss (SL): Below 146.90.

• Risk/Reward: 2:1, if the channel holds.

With technical support, US positive and yen weakness the USD/JPY is looking higher. But watch US inflation data and BoJ’s response to inflation for any changes in sentiment.