USDJPY forecast: the pair forms a correction before a decline

Amid Japan’s economic data, the USDJPY rate may form a correction before falling to the 148.70 level. Discover more in our analysis for 26 February 2025.

USDJPY forecast: key trading points

• The BoJ trimmed mean core CPI: previously at 1.9%, currently at 2.2%
• Japan’s Leading Economic Index: previously at 107.5, currently at 108.3
• USDJPY forecast for 26 February 2025: 148.70 and 150.45

Fundamental analysis

The BoJ trimmed mean core CPI is an inflation indicator calculated by the Bank of Japan. Unlike the traditional core CPI, it is based on a trimmed mean method, with 10% of minimum and maximum price values excluded from the calculation to smooth out fluctuations and better identify steady inflation trends.

The index helps the Bank of Japan to better estimate underlying price pressures in the economy by ignoring short-term spikes in food and energy prices. The actual reading was 2.2%, up from the previous one, which should have had a positive impact on the yen. However, after the data release, the USDJPY rate began to rise as part of a correction.

Japan’s Leading Economic Index estimates the overall economic climate, combining 12 different indicators, including machinery orders and stock quotes. A reading below 50 shows that most indicators are negative, while a reading above 50 suggests positive changes in most indicators.

Fundamental analysis for 26 February 2025 shows that the actual reading is 108.3, up from the previous period. The high reading could be one of the factors that helped the yen strengthen against the US dollar.

USDJPY technical analysis

Having tested the lower Bollinger band, the USDJPY price has formed a Hammer reversal pattern on the H4 chart. At this stage, it continues its upward momentum following the pattern signal. The quotes will likely pull back to the resistance level as they have rebounded from the support line and continue to move within the descending channel.

The target for a correction is 150.45. A rebound from this level may open the potential for a more substantial downward wave.

However, the USDJPY forecast for today also takes into account another scenario, where the price declines to 148.70 without testing the resistance level.

Summary

Amid economic data from Japan, the USDJPY forecast appears optimistic for the yen, with the USDJPY technical analysis suggesting a correction towards 150.45 before a further decline.