Japan’s machinery sector breaks records, USDJPY slides further

The USDJPY pair continues its sharp decline as the US dollar remains under pressure. The current rate is 143.30. Find more details in our analysis for 22 May 2025.

USDJPY forecast: key trading points

• Fears of financial market instability and declining confidence in US assets have increased pressure on the US dollar
• Japan’s core machinery orders surged 13% in March
• Strong macroeconomic data from Tokyo boosted the yen’s position
• USDJPY forecast for 22 May 2025: 142.25

Fundamental analysis

The USDJPY rate has dropped to a two-week low amid a stronger yen, fuelled by rising concerns over Donald Trump’s tax policy. Proposed tax cuts are expected to add more than 3 trillion USD to the US national debt, which could erode investor confidence in US assets and destabilise markets.

At the G7 meeting in Canada, Japan’s Finance Minister Katsunobu Kato stated that he did not discuss exchange rate levels with his US counterpart Scott Bessent. His comments reduced expectations of a coordinated intervention in the currency market.

Additional support for the yen in the USDJPY forecast came from robust machinery order data. In March 2025, Japan’s core machinery orders rose by 13% month-on-month to 1.01 trillion yen, far exceeding expectations for a 1.6% decline. Year-on-year, orders grew 8.4% compared to 1.5% in February, contrary to the forecast for a 2.4% drop.

USDJPY technical analysis

The USDJPY rate remains within a descending channel. Today’s USDJPY forecast suggests a short-term rebound to the EMA-285 Moving Average, likely followed by a renewed downward impulse targeting 142.25.

Technical indicators support the bearish outlook as Moving Averages remain directed downwards, reflecting a prevailing downtrend. The Stochastic Oscillator is rebounding from a descending resistance line, with a bearish crossover of the signal lines reinforcing the likelihood of a decline.

Consolidation below the 142.95 level would confirm the bearish scenario and open the way to the 142.25 target.

Summary

The USDJPY fundamental backdrop shows increasing pressure on the US dollar due to political risks in the US and unexpectedly strong Japanese economic data. USDJPY technical analysis confirms the development of a downward impulse, with the nearest target at 142.25.