Double Top pattern increases downside risk for USDJPY

The USDJPY rate shows moderate growth, but ongoing expectations of BoJ tightening may intensify pressure on the US dollar. The current quote is 147.73. Discover more in our analysis for 26 August 2025.

USDJPY forecast: key trading points

• Pressure on the US dollar increased after US President Donald Trump announced the dismissal of Fed Governor Lisa Cook
• BoJ Governor Kazuo Ueda stated that wage growth will continue due to labour shortages
• Ongoing wage growth reinforces expectations of another rate hike in Japan
• USDJPY forecast for 26 August 2025: 146.70

Fundamental analysis

The USDJPY rate is strengthening for the second consecutive session, remaining within a sideways range. Pressure on the dollar intensified during the Asian session after US President Donald Trump announced the dismissal of Fed Governor Lisa Cook over mortgage fraud allegations. This raised fresh doubts about the Fed’s independence and its ability to operate free from political influence, although the expected rate cut is likely already priced in.

BoJ Governor Kazuo Ueda emphasised that wage growth will continue amid labour shortages, strengthening expectations of another rate hike in Japan. These factors may create additional downside pressure on the USDJPY pair in today’s forecast. Investors also await key Japanese data this week, including industrial production, retail sales, and the consumer confidence index.

USDJPY technical analysis

The USDJPY rate is retreating from a strong resistance level at 148.00 while staying within the ascending channel. The current dynamics point to a high probability of a correction towards the channel’s lower boundary at 146.70.

Today’s USDJPY forecast suggests a decline under this scenario. The Stochastic Oscillator gives a bearish signal: its lines turned downwards after testing overbought territory, confirming the likelihood of short-term downside movement.

An additional pressure factor is the high probability of forming a Double Top reversal pattern, which increases the risk of the pair moving below 147.00.

Summary

The current USDJPY fundamentals reflect continued pressure on the US dollar and short-term downside risks. USDJPY technical analysis confirms the dominance of a bearish scenario, targeting 146.70 within the potential Double Top formation.

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