Wedge pattern on USDJPY chart – sellers gear up for downward move

The USDJPY rate is currently undergoing a correction but remains under pressure, with the price now at 142.99. Find more details in our analysis for 7 May 2025.

USDJPY forecast: key trading points

• Japan’s services PMI for April was revised upwards from 52.2 to 52.4
• New orders in the service sector reached the highest level in nearly a year, indicating strong domestic demand in Tokyo
• USDJPY forecast for 7 May 2025: 141.45

Fundamental analysis

The USDJPY rate is recovering after declining for three consecutive trading sessions, as investors continue to monitor trade negotiations between the US and Japan. Tokyo authorities aim to finalise a bilateral agreement by June, supporting interest in risk assets and currency markets.

Last week, the Bank of Japan kept its interest rate unchanged at 0.5% as expected. However, the central bank downgraded its forecasts for economic growth and inflation, reinforcing market expectations that further monetary tightening is unlikely in the near term.

Meanwhile, Japan’s services PMI for April 2025 was revised upwards to 52.4 from a preliminary 52.2, marking the fastest pace of new order growth in nearly a year and indicating steady domestic demand. These figures could push the USDJPY pair lower as part of today’s forecast.

USDJPY technical analysis

The USDJPY pair remains under pressure following a failed attempt to initiate a bullish correction. The chart suggests the potential formation of a Wedge reversal pattern, indicating sustained selling pressure.

Today’s USDJPY forecast expects downward momentum to develop towards 141.45. The Stochastic Oscillator is rebounding from the resistance level and reversing from the overbought area, pointing to waning bullish momentum.

The bearish scenario will be confirmed by the price consolidation below 142.45, marking a breakout below the lower boundary of the Wedge pattern.

Summary

Despite Japan’s push for a trade deal with the US and upbeat service sector data, the USDJPY forecast remains bearish due to the BoJ’s dovish stance and revised economic and inflation forecasts. The USDJPY technical analysis indicates persistent selling pressure, with a breakout below 142.45 likely to signal readiness for a downward move towards 141.45.