USDJPY will return to rally a bit later: correction is needed

The USDJPY pair pulled back to 148.57 after reaching a new peak. The strong US dollar remains a threat to the yen. Discover more in our analysis for 31 July 2025.

USDJPY forecast: key trading points

• The USDJPY pair hit a four-month high and is now declining
• The Bank of Japan kept the interest rate unchanged
• USDJPY forecast for 31 July 2025: 148.58 and 147.80

Fundamental analysis

The USDJPY rate is declining towards 148.57 after strengthening in the morning session. As expected, the Bank of Japan held its key interest rate steady.

This marks the fourth consecutive meeting where the regulator kept the rate at 0.5% following a 25-basis-point hike in January. The Bank of Japan once again maintained a cautious stance, noting that core inflation might temporarily slow due to weak growth but should pick up again later. However, downside risks to the economy remain.

The central bank also highlighted rising uncertainty in global trade and potential negative impacts on Japan's economy.

Previously, the JPY fell close to a four-month low after the US Federal Reserve kept its rate steady and gave no clear signals regarding future cuts. This decision supported the US dollar.

The USDJPY forecast is positive.

USDJPY technical analysis

On the H4 chart, the USDJPY pair shows consolidation near the top of its recent range after a solid rebound from the 146.80 low on 22-23 July.

The pair reached the 149.54 level, where it faced resistance. This area has now blocked upward movement twice, making it a key level for short-term dynamics. So far, attempts to break higher have failed, and the price has rolled back to the 148.80-149.00 area.

The immediate support level lies at 148.58, from where the latest upward impulse began. A breakout below this level may increase pressure and drive the pair towards 147.80. The 146.80 level remains a crucial benchmark for sellers in the event of a deeper correction.

The Bollinger Bands are narrowing, indicating lower volatility and a possible consolidation phase before the next impulse.

Summary

The USDJPY pair is undergoing a local correction, but the overall sentiment remains positive. The USDJPY forecast for today, 31 July 2025, suggests a deeper correction towards 148.58, from where a move towards 147.80 may unfold.