Inflection Point Looms, Yet Range-Bound Dynamics Prevail

Summary:

Japan’s CGPI accelerated to a 2.7% YoY pace in August, while the rate of decline in import prices continued to moderate.

BUY USDJPY

Close Time

CLOSED

147.122

Entry Price

151.800

145.890

158.637 -0.078 -0.05%

14.0

Pips

Profit

145.890

147.262

Exit Price

147.122

Entry Price

151.800

Fundamentals

Recently, USDJPY has experienced heightened volatility. Since printing a cycle low at 139.89 on 22 April 2025, the pair has remained confined within a four-month-plus "rising-wedge" formation.

On Monday, USDJPY rallied as much as 0.8% to an intraday peak of 148.59, yet the entire move has since been retraced. By Thursday the quote was effectively unchanged at 147.98.

Market participants have largely looked through the political noise stemming from Prime Minister Ishiba’s resignation, instead focusing on variables that could alter the Bank of Japan(BoJ)’s current trend of monetary-policy normalisation.

Thursday’s release showed Japan’s August Corporate Goods Price Index (CGPI) edging up to a 2.7% YoY pace from 2.5% in July, in line with consensus. The uptick was driven primarily by food & beverage prices, which accelerated to 5.0% YoY (prev. 4.7%). Utility charges, cushioned by government subsidies, fell 2.9% YoY, mitigating the headline impulse.

Import-price deflation narrowed markedly for a second straight month: yen-denomitated import prices declined only 3.9% YoY versus a revised –10.3% drop in July. The data signal that, while domestic food inflation remains sticky, external cost pressures are now stabilising.

All told, the shifting fundamental backdrop is likely to exert upward pressure on the JPY.

Inflection Point Looms, Yet Range-Bound Dynamics Prevail_1

Technical Analysis

The intraday bias of USDJPY stays neutral. The pair is expected to consolidate above 146.29. As long as 149.12 caps on a closing basis, upside risk remains dominant. Conversely, a sustained break below the EMA55 (currently 147.15) would confirm completion of the 139.87 rebound—already tracing out a clear three-wave advance to 150.90—and open the door to a deeper corrective leg.

Trading Recommendations

Trading Direction: Buy

Entry Price: 149.19

Target Price: 151.80

Stop Loss: 145.89

Valid Until: September 26, 2025, 23:55:00

Support: 146.85/145.86/145.21

Resistance: 149.19/150.97/151.32

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