USD/JPY, GBP/JPY Technical Outlook: BOJ Inaction Weighs on Japanese Yen

BOJ Keeps Rates Steady:

Interest rates held at 0.5% in a unanimous decision
BOJ reaffirmed commitment to raising rates if economic and price forecasts materialise
BOJ downgraded GDP growth forecasts for fiscal years 2025 and 2026
Inflation is still expected to hover around the 2% target through FY2027
GBP/JPY and USD/JPY look set to break higher

The Bank of Japan (BoJ) kept its monetary policy unchanged on Thursday, holding interest rates at 0.5%. While market pricing had suggested a ~97% chance of no change today, the BoJ is a central bank known for going against consensus from time to time.

The board left its inflation outlook unchanged but lowered growth forecasts for fiscal years 2025 and 2026, citing uncertainty over US tariffs and broader trade tensions. Core CPI was slightly lower, and headline CPI is expected to hover around the BoJ’s 2% target through to FY2027.

Trump’s Tariffs Could Delay, Not Derail, Further BoJ Hikes

Lower growth expectations and rising concerns over trade could be taken as a sign that the BoJ is losing its appetite for further rate hikes this year. However, the accompanying statement noted that “we will continue to raise our policy rate” if the economic outlook plays out as expected. Yet with the Japanese yen weaker across the board, traders are no doubt questioning whether further hikes will materialise.

View related analysis:

USD/JPY Technical Analysis: US Dollar vs Japanese Yen

I outlined a bullish case for the US dollar in several articles over the past couple of weeks (see links above). More specifically, USD/JPY appears to be rising in line with my call for an ABC correction higher. The daily chart shows it is nearing last week’s high, so a pullback may be due. However, a break above last week’s high would assume a run to 145, with a break above that bringing the 146 handle into focus — near the weekly VPOC and trend resistance.

USD/JPY 1-hour chart

The intraday chart shows prices have reached the daily R2 pivot and are now approaching last week’s high (LW high). The RSI (14) is also overbought, so these are not levels I would personally be seeking longs around. However, if prices do retrace lower, bulls could look for evidence of a swing low around the daily R2 or the

143.24 high. My bias remains bullish above the 142.80 high-volume node (HVN).

GBP/JPY Technical Analysis: British Pound vs Japanese Yen

The daily chart has been trending higher since GBP/JPY staged a volatile shakeout and reversal around the 186 support level. While GBP/JPY has printed three down days since Friday’s high, they appear to be part of an orderly and shallow correction within a strong bullish trend. Support was also found around the 10- and 20-day EMAs, as well as the weekly and monthly pivot points.

Momentum has clearly realigned with the bullish trend, so I’m now on guard for GBP/JPY to break to a new cycle high. The bias is for a move towards 193, near the weekly R1 pivot.

GBP/JPY 1-hour chart

The 1-hour chart highlights the burst of bullish momentum following the BoJ decision. Notably, support was found around the 200-day EMA before bulls regained control.

Resistance has been met around the daily R1 pivot (191.60) and the 191.27 highs, so perhaps GBP/JPY will offer bulls a pullback opportunity — either to reload or to join the move higher. Note that the daily R2 pivot sits just above the 191.72 and 191.84 highs, making it a viable target for bulls ahead of a larger move to 193.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.