Japan Maintains Expectations of Interest Rate Hikes! When Will the USDJPY Stabilize?

Tank

Economic

Forex

Technical Analysis

Summary:

Data released by the Japan Statistics Bureau on Friday indicate that Tokyo's overall Consumer Price Index increased by 2.6% year-on-year in August, down from 2.9%. The inflation report for Tokyo sustains market expectations of the Bank of Japan resuming interest rate hikes, thereby supporting the Japanese yen.

SELL USDJPY

Close Time

CLOSED

147.400

Entry Price

146.200

148.600

155.430 +0.085 +0.05%

120.0

Pips

Loss

146.200

148.601

Exit Price

147.400

Entry Price

148.600

Fundamentals

The data released by Japan's Statistics Bureau on Friday indicates that the Consumer Price Index (CPI) in the Tokyo metropolitan area increased by 2.6% year-over-year in August, down from 2.9%. Concurrently, the core CPI in Tokyo rose by 2.5% year-over-year, also below the previous 2.9%, aligning with market expectations. As of August 29, 2025, Tokyo's core CPI declined to 2.5% year-over-year, consistent with market forecasts. The Bank of Japan (BoJ) monitors Tokyo's CPI excluding fresh food and energy, which rose by 3.0% in August, slightly below the previous 3.1%. The inflation report in Tokyo sustains market expectations of a potential resumption of interest rate hikes by the BoJ, supporting the Japanese yen. According to a Reuters survey of economists conducted in August, nearly two-thirds anticipate the BoJ will implement at least a 25 basis point rate increase later this year, with this expectation having increased over the past two weeks.

The Q2 preliminary estimate of the U.S. Gross Domestic Product (GDP) indicates an annualized growth rate of 3.3%, surpassing the prior estimate of 3.0%, highlighting a robust rebound from the sluggish Q1. Initial unemployment insurance claims last week declined to 229,000, suggesting that despite softening employment growth, the labor market remains resilient; continued claims slightly decreased to 1.95 million. The Personal Consumption Expenditures (PCE) Price Index, released concurrently with GDP, was marginally revised downward to 2.0% for the Q2, while the core PCE remained steady at 2.5%, underscoring persistent underlying inflationary pressures. The strong economic indicators have contributed to a rebound in the U.S. dollar.

Technical Analysis

In the 1H timeframe, the USDJPY price oscillates around the Bollinger Bands' upper and lower bands, currently consolidating near the middle band. Following a golden cross in the MACD, the MACD line and signal line have reverted to around the zero-axis, with the RSI at 54, indicating a neutral market sentiment and potential for a trend reversal. A decisive break above the middle Bollinger Band could propel the price toward the EMA200 and previous resistance levels at approximately 147.46 and 148.18; failure to do so may lead to a decline toward 145.8. In the 1W timeframe, the Bollinger Bands are narrowing, with price oscillating around the middle band. After a MACD golden cross, the MACD line and signal line have pulled back toward the zero-axis, and the RSI stands at 49, reflecting a predominantly sideways trend with imminent potential for a trend shift. The key focus is on whether the price can hold above the middle Bollinger Band; a successful hold could lead to an upward breakout beyond 150, while failure might see a decline toward 146. In the short term, the strategy is to go short initially and then go long.

Japan Maintains Expectations of Interest Rate Hikes! When Will the USDJPY Stabilize?_1

Japan Maintains Expectations of Interest Rate Hikes! When Will the USDJPY Stabilize?_2

Trading Recommendations

Trading Direction: Sell

Entry Price: 147.4

Target Price: 146.2

Stop Loss: 148.6

Support: 145.8, 142.6, 141.6

Resistance: 148.5, 149.6, 151

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Manuel

Central Bank

Economic

Summary:

A sustained close above these levels, followed by a decisive break of the trendline, could open the door to a more extended bullish move.

BUY USDCHF

Close Time

CLOSED

0.80093

Entry Price

0.80700

0.79800

0.80419 -0.00036 -0.04%

29.3

Pips

Loss

0.79800

0.79757

Exit Price

0.80093

Entry Price

0.80700

Switzerland’s Q2 GDP figures showed the economy slowed to an annual growth rate of 1.2%, down from 1.8% in the previous quarter and weaker than expectations of 1.4%. The slowdown highlights the challenges facing the Swiss economy amid global headwinds. Adding to the soft tone, the KOF Leading Indicator—a forward-looking gauge of economic activity—dropped to 97.4 in August, falling from 101.3 in July and undershooting market expectations for a milder decline to 98.0.

In contrast, the Swiss labor market held steady. Employment increased 0.6% YoY to 5.532 million in Q2, matching the pace of the prior quarter. The expansion was largely driven by the services sector, which grew 0.9% to reach 4.402 million, underscoring its role as the backbone of job creation. On the policy front, the Swiss government announced new initiatives aimed at enhancing the country’s competitiveness as a business hub, following the imposition of steep 39% U.S. import tariffs on Swiss goods. Measures include efforts to ease regulatory burdens on companies, with officials signaling that costly new rules could be postponed to safeguard investment and growth.

Across the Atlantic, political uncertainty surrounding the U.S. central bank persists. President Donald Trump’s push to remove Fed Governor Lisa Cook is advancing through the courts, yet the White House is already preparing for her replacement. Trump stated that “very good people” are being considered, noting Treasury Secretary Scott Bessent is leading the selection process. Reports suggest that Stephen Miran—initially nominated to replace Adriana Kugler on the Fed Board—could be redirected to Cook’s position, potentially extending his role at the central bank. Senate hearings for Miran’s nomination are scheduled for next week, adding another layer of scrutiny over Fed leadership.

On the data front, the second estimate of Q2 U.S. GDP showed an annualized growth rate of 3.3%, outpacing expectations of 3.1% and improving from the prior 3.0% reading. Inflation metrics were slightly softer: both the GDP Price Index and preliminary headline PCE prices eased to 2.0% from 2.1%, while core PCE advanced 2.5% QoQ, just under the forecast of 2.6%. Weekly jobless claims dipped to 229K, slightly better than the 230K expected and down from a revised 234K, reinforcing the view of a resilient labor market.

Housing data, however, remained weak. Pending home sales declined 0.4% in July, a sharper drop than the 0.1% expected, though still an improvement from June’s 0.8% fall. Higher borrowing costs and affordability pressures continue to weigh on buyer demand, keeping the sector under strain.

From the Fed, New York President John Williams described the U.S. economy as “slowing, not stalling.” He highlighted that GDP growth has eased to around 1.0%–1.5%, while labor market momentum has moderated. Williams reaffirmed that policy remains in a “moderately restrictive” stance, with rates above neutral, and reiterated that rate cuts could be appropriate over time if the economy unfolds in line with expectations.

Treasury markets reflected this dovish tilt. The 10-year yield slipped 2.5 basis points to 4.215%, while real yields dropped three basis points to 1.785%. According to the CME FedWatch tool, markets are pricing an 87% probability of a 25-basis-point cut in September, with another cut anticipated before year-end. Bullish Momentum Could Return From Local Support_1

Bullish Momentum Could Return From Local Support_1

Technical Analysis

The USDCHF pair has bounced from the 0.8000 level, which continues to act as a key support. Repeated failures to break lower could encourage a corrective rebound toward the descending trendline around 0.8064. The 100- and 200-period moving averages, positioned at 0.8059 and 0.8041 on the 4-hour chart, overlap with this zone, suggesting a strong confluence of resistance. A sustained close above these levels, followed by a decisive break of the trendline, could open the door to a more extended bullish move.

On the other hand, a clean break below the 0.8000 threshold would expose the pair to deeper downside risk. The RSI only reached 39 during the recent leg lower, leaving room for bearish momentum to reassert itself. A failure to hold 0.8000 would therefore invalidate the short-term bullish setup and potentially trigger a more significant downward extension.

Trading Recommendations

Trading direction: Buy

Entry price: 0.8010

Target price: 0.8070

Stop loss: 0.7980

Validity: Sep 05, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Commodity

Summary:

A decisive break lower could therefore validate the correction and set the stage for a deeper retracement before bulls attempt to regain control.

SELL XAUUSD

Close Time

CLOSED

3409.75

Entry Price

3370.00

3450.00

4207.61 +9.70 +0.23%

402.5

Pips

Loss

3370.00

3450.03

Exit Price

3409.75

Entry Price

3450.00

President Donald Trump’s effort to remove Federal Reserve Governor Lisa Cook is now moving into the courts, yet the White House has already begun preparing for her replacement. On Tuesday, Trump remarked, “We have some very good people for that position,” while pointing out that Treasury Secretary Scott Bessent is overseeing the search process for the next Fed Chair. Reports indicate that Stephen Miran—originally nominated to replace Adriana Kugler on the Fed Board—could instead be redirected to Cook’s seat for a longer term. Senate hearings for Miran’s nomination to succeed Kugler are expected to take place next week, adding further political intrigue around the central bank’s leadership.

Meanwhile, the second estimate of Q2 U.S. GDP revealed an annualized expansion of 3.3%, beating forecasts of 3.1% and improving from the prior 3.0% reading. Price indices were slightly softer: both the GDP Price Index and preliminary headline PCE prices came in at 2.0%, down from 2.1% previously. The preliminary core PCE price index rose 2.5% QoQ, just shy of the 2.6% estimate. At the same time, weekly jobless claims slipped to 229K, marginally better than the consensus of 230K and down from a revised 234K, signaling continued resilience in the labor market.

In housing, pending home sales fell 0.4% in July, a deeper decline than the 0.1% drop expected, though still an improvement from June’s 0.8% fall. The figures highlight ongoing weakness in the sector, weighed down by high borrowing costs and affordability constraints that continue to challenge buyers.

New York Fed President John Williams offered a cautious but balanced perspective, describing the U.S. as an economy that is “slowing, not stalling.” He noted that GDP growth has cooled to around 1.0%–1.5%, while hiring momentum has also moderated. Williams stressed that policy remains in a “moderately restrictive” stance, with rates still above neutral. He reiterated that if the economy evolves broadly as expected, interest rates will eventually need to move closer to neutral—suggesting that rate cuts could become appropriate over time.

Treasury yields extended their decline. The 10-year yield slipped 2.5 basis points to 4.215%, while U.S. real yields—derived from nominal yields adjusted for inflation expectations—fell three basis points to 1.785% at the time of writing. Futures markets continue to tilt dovish: according to the CME FedWatch tool, traders are assigning an 87% probability of a 25-basis-point rate cut in September, with an additional 25 bps reduction priced in by year-end. Strong Resistance Could Trigger a Downward Pullback_1

Strong Resistance Could Trigger a Downward Pullback_1

Technical Analysis

Gold (XAUUSD) briefly reached 3423 before retreating, and the rejection from this level could mark the beginning of renewed downside pressure. Historically, the metal has struggled to sustain momentum above these levels, which has often triggered selling activity. The fact that this zone lies close to gold’s all-time highs further strengthens the case for profit-taking among market participants. If the price fails to break higher, a corrective move toward 3368 looks plausible. This area coincides with the 0.618 and 0.50 Fibonacci retracements, increasing the likelihood that a pullback gravitates toward this support zone before any fresh attempt at recovery.

The 100- and 200-period moving averages, located at 3360 and 3355 on the 4-hour chart, are tightly clustered together. This convergence signals that gold has been trading sideways for an extended period. Should the bearish rejection continue, it would reinforce the notion of a range-bound market. Moreover, the alignment of the moving averages with key Fibonacci levels adds confluence, making these areas potential magnets for price action. A decisive break lower could therefore validate the correction and set the stage for a deeper retracement before bulls attempt to regain control.

Trading Recommendations

Trading direction: Sell

Entry price: 3410

Target price: 3370

Stop loss: 3450

Validity: Sep 05, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

Australia’s July CPI leapt to 2.8% YoY a one-year high, all but eliminating the risk of a September rate cut by the RBA. A near-term floor may be forming in EURAUD.

BUY EURAUD

Close Time

CLOSED

1.78931

Entry Price

1.80980

1.77000

1.75516 +0.00249 +0.14%

193.1

Pips

Loss

1.77000

Exit Price

1.78931

Entry Price

1.80980

Fundamentals

Australia’s headline consumer price index accelerated to 2.8% YoY in July, far above the 2.3% consensus and sharply higher than June’s 1.9%. The print marks the strongest annual pace since July 2024 and snaps a multi-month disinflationary trend.

Core measures firmed in tandem. Trimmed-mean CPI rose to 3.2% from 2.5%, while the weighted-median gauge climbed to 2.7% from 2.1%—both the fastest readings in three months.

The result intensifies concerns that price pressures could prove persistent. July data, as the first month of the quarter, are goods-heavy and therefore offer limited insight into services inflation, which will be clearer in subsequent releases.

For the Reserve Bank of Australia, the report is a cautionary signal rather than a trigger for panic. Policymakers will wait for the full quarterly CPI update before reassessing the stance, but today’s outcome effectively rules out a cut at the 24 September board meeting.

Absent a marked deterioration in labour-market conditions or another downside shock, November remains the more realistic window for the next policy adjustment.

Core Inflation Surges, Market Zeroes In on RBA November Meeting_1

Technical Analysis

The upside surprise in July CPI propelled AUD crosses sharply higher, reinforcing the RBA’s case for a measured easing cycle and removing any prospect of an accelerated easing path.

EURAUD has retraced from the 1.8155 short-term high and continues to drift lower. Intraday bias remains bearish. The 38.2% Fibonacci retracement of the 1.7245–1.8155 advance sits at 1.7807, virtually coinciding with the lower bound of the descending channel (now at 1.7816) and the MA55 (1.7841).

A sustained break below this confluence support would confirm completion of the up-move from 1.7245 and imply that the corrective pattern from 1.8554 has entered its third leg, exposing the 61.8% retracement at 1.7593.

Nevertheless, we view the support cluster as sufficiently robust to underpin a resumption of the broader uptrend.

Trading Recommendations

Trading Direction: Long

Entry Price: 1.7840

Target Price: 1.8098

Stop Loss: 1.7700

Valid Until: September 13, 2025, 23:55:00

Support: 1.7853/1.7810/1.7885

Resistance: 1.7922/1.7982/1.8082

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The GBP/JPY retreated toward 198.50 on Thursday as the yen gained ground despite rising domestic uncertainties flagged by a Bank of Japan policymaker.

SELL GBPJPY

Close Time

CLOSED

198.600

Entry Price

197.560

199.300

207.092 -0.008 0.00%

43.6

Pips

Profit

197.560

198.164

Exit Price

198.600

Entry Price

199.300

The British pound weakened against the Japanese yen in European trading on Thursday, with the GBP/JPY pair sliding toward 198.50 as renewed yen strength pressured the cross. The move comes against a backdrop of heightened global trade tensions, cautious rhetoric from Japanese policymakers, and diverging central bank outlooks between Tokyo and London.

The yen outperformed most of its peers, surprising some traders who had expected the currency to remain subdued given persistent concerns over Japan’s fragile recovery. The rally was sparked after Bank of Japan (BoJ) board member Junko Nakagawa struck a cautious tone, warning that U.S. tariffs on Japanese imports are clouding the domestic outlook.

Nakagawa emphasized that “there remain many uncertainties” despite the U.S. and Japan having reached a trade agreement aimed at easing tensions. He warned that Washington’s tariff stance is weighing on “business and household sentiment,” dampening the mood in Japan’s export-oriented economy. While such remarks might normally weigh on the yen by signaling a more dovish stance, investors appeared to seek safety in the Japanese currency, interpreting the cautious outlook as a reason to temper expectations of further BoJ tightening in the near term.

The sense of uncertainty was compounded by news that Japan’s chief trade negotiator, Ryosei Akazawa, canceled a planned visit to Washington. The trip was intended to present details of Tokyo’s proposed $550 billion investment package, designed in part to secure tariff relief from the United States. The cancellation not only adds to doubts about the trajectory of U.S.-Japan trade relations but also leaves markets guessing about the broader impact on Japan’s export sector, which has already shown signs of strain.

In the UK, the pound also came under pressure despite comments from Bank of England Monetary Policy Committee member Catherine Mann, who reinforced her hawkish stance. Mann reiterated that interest rates should remain elevated for longer to counter persistent inflationary pressures, signaling little appetite for near-term easing. However, the pound failed to gain traction, as investors questioned whether the BoE’s hawkish tone would be sufficient to offset domestic growth concerns and the rising risk of policy divergence with other major central banks.

For currency traders, the dynamics in GBP/JPY reflect a tug-of-war between safe-haven demand for the yen and lingering uncertainty over how long sterling can find support from hawkish BoE rhetoric. With U.S. tariffs casting a shadow over Japan’s outlook and the UK economy showing signs of strain from higher borrowing costs, neither side of the pair looks convincingly strong in the medium term.

The yen’s rally may also have been aided by broader risk aversion across global markets. Investors increasingly appear to be treating the currency as a defensive hedge against trade policy uncertainty, even as the BoJ’s tightening cycle remains far less aggressive than that of its peers.

Technical Analysis

From a technical perspective, GBP/JPY recently broke out of a symmetrical triangle pattern and is now reacting to resistance near 198.60 — a level that marks the current sell entry. The failure to sustain momentum above this area suggests renewed downside pressure.

We are eyeing 197.56 as the next major target, a level that coincides with pullback support and the 50% Fibonacci retracement, while the stop-loss level sits at 199.30, aligned with swing-high resistance. A sustained move below 198.50 could open the door for further losses, particularly if yen demand remains resilient.

TRADE RECOMMENDATION

SELL GBPJPY

ENTRY PRICE: 198.60

STOP LOSS: 199.30

TAKE PROFIT: 197.56

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The euro extended its recovery against the U.S. dollar on Thursday, buoyed by dovish Federal Reserve commentary and political drama in Washington, even as weak Eurozone data capped upside momentum.

BUY EURUSD

Close Time

CLOSED

1.16650

Entry Price

1.17500

1.15700

1.16495 +0.00069 +0.06%

16.2

Pips

Profit

1.15700

1.16812

Exit Price

1.16650

Entry Price

1.17500

The euro rose further against the U.S. dollar on Thursday, with the EUR/USD pair climbing from a weekly low near 1.1575 to touch an intraday high around 1.1670 as investors positioned themselves ahead of key U.S. economic data. The move came as dovish comments from a senior Federal Reserve official and renewed political drama in Washington undermined confidence in the greenback, tilting market sentiment in favor of the common currency despite lackluster Eurozone data.

The recovery gained traction late Wednesday after New York Fed President John Williams struck a notably accommodative tone in remarks to CNBC. Williams suggested that interest rates are likely to move lower over time, emphasizing that every monetary policy meeting remains “live” and that officials will remain data-dependent. His language fueled speculation that the Fed could deliver an interest rate cut as early as September—a prospect that sent U.S. Treasury yields lower and pressured the dollar across major currency pairs.

The dollar’s weakness was further compounded by President Donald Trump’s renewed confrontations with the Fed. Earlier this week, Trump attempted to dismiss Governor Lisa Cook, reportedly to pave the way for a more dovish policymaker aligned with his pro-growth agenda. While the move is unlikely to succeed in practice, it reinforced concerns about political interference at the central bank and dented the perception of Fed independence—an institutional cornerstone closely watched by investors.

The euro’s rally, however, was not built on strong fundamentals from the Eurozone itself. Economic data released Thursday highlighted ongoing fragility across the bloc. The Economic Sentiment Index slipped to 95.2 in August, down from a downwardly revised 95.7 in July and below consensus forecasts of 96. Industrial confidence also deteriorated, falling to -1.3 from -0.5, while consumer confidence remained deeply negative at -15.5. The numbers underscore a region struggling to find traction amid sluggish growth and persistent political risks.

One such risk stems from France, where opposition parties have refused to back Prime Minister Françoise Bayrou in an upcoming confidence vote scheduled for September. The standoff raises the prospect of another government collapse and snap elections, an unwelcome development for markets still digesting Europe’s political turbulence from earlier this year.

Still, the euro’s ability to rally despite weak regional data and political risks speaks volumes about the pressure weighing on the U.S. dollar. Beyond Williams’ dovish remarks, traders are also bracing for U.S. economic releases that could further shape expectations for Fed policy. Later Thursday, the Commerce Department will publish its second estimate of Q2 GDP, which economists expect to show a modest upward revision. Yet, investors may shrug off the GDP figures, focusing instead on Friday’s release of the Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) Price Index—for clearer signals about the September FOMC decision.

Technical Analysis

From a technical perspective, the EUR/USD pair has broken through near-term resistance at 1.1665, with momentum indicators suggesting further upside potential. The move above the 50-day exponential moving average has relieved some of the recent bearish pressure, allowing buyers to reassert control. The pair is now trading around 1.1632, holding comfortably above short-term support levels.

The Relative Strength Index (RSI), however, has entered overbought territory, flashing a potential warning that the rally could slow in the near term. If momentum persists, the next bullish target sits near 1.1750—a level that coincides with prior swing highs and represents a key test for buyers. On the downside, initial support lies at 1.1600, followed by stronger levels at 1.1575. A sustained drop below these thresholds would revive bearish momentum and negate the current recovery.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.16650

STOP LOSS: 1.15700

TAKE PROFIT: 1.1750

Risk Warnings and Disclaimers

Add to Favorites

Eva Chen

Central Bank

Commodity

Summary:

Gold drew support from New York Fed President John Williams, who signalled room for rate cuts and praised Governor Lisa Cook, reinforcing the metal’s safe-haven bid.

SELL XAUUSD

Close Time

CLOSED

3397.96

Entry Price

3332.00

3445.00

4207.61 +9.70 +0.23%

470.4

Pips

Loss

3332.00

3445.00

Exit Price

3397.96

Entry Price

3445.00

Fundamentals

Gold extended its positive tone on Thursday, clawing back losses triggered earlier in the week by renewed threats to Fed independence. Spot XAUUSD pierced the $3,400 level in intraday dealings, up 0.15%.

Speaking to CNBC on Wednesday, Williams said policy rates are likely to drift lower over time, though he declined to offer a timeline for the first cut. “The economy remains fundamentally strong,” he noted, echoing the FOMC’s consensus that while growth has moderated, the labour market is “solid.”

“Should incoming data evolve in line with our dual-mandate objectives, a gradual reduction in the federal-funds rate would be appropriate,” Williams said. Markets continue to price an easing cycle commencing at the 18 September FOMC meeting.

Williams, while sidestepping direct comment on President Trump’s attempt to remove Governor Lisa Cook, lauded her integrity and commitment to the central bank’s statutory mandate. He argued that Fed independence is “critical for securing low inflation and long-run economic and financial stability.”

Market watch: Investor unease over the Fed’s autonomy and the latent risk of a U.S. inflation flare-up is underpinning bullion. If the President succeeds in dismissing Cook, the administration would gain a working majority on the seven-seat Board, fuelling fears that monetary policy could be politicised and further stoking safe-haven demand for gold.

A related concern is that perceived erosion of Fed independence could prompt premature easing, eroding market confidence and ultimately re-igniting inflation pressures.

Upside Momentum Near Exhaustion; $3,400 Handle Looks Increasingly Fragile_1

Technical Analysis

On the four-hour chart, gold staged another leg higher on Thursday, breaching $3,400. Momentum indicators, however, suggest the advance is running on fumes, shifting attention toward a potential pullback to the $3,350 support zone. The market appears to be carving out a broad range around that level; a decisive break lower would open the door to a deeper retracement toward $3,335.

This bearish scenario is corroborated by the MACD: the signal line remains above the zero axis but has rolled over, while the histogram is printing a bearish divergence—classic signs that upward momentum is fading and a probe of recent lows is likely.