USDJPY forecast: the pair declines amid rising inflation in Japan

The USDJPY rate plunged below 150.00 amid the release of Japan’s stronger-than-expected inflation statistics for January. Discover more in our analysis for 21 February 2025.

USDJPY forecast: key trading points

• Market focus: Japan’s national Consumer Price Index (CPI) rose by 4.0% in January
• Current trend: the downtrend
• USDJPY forecast for 21 February 2025: 150.00 and 148.60

Fundamental analysis

According to today’s statistics, Japan’s annual national inflation rate rose by 4.0% in January 2025 from 3.6% in the previous month, marking the highest level since early 2023. The core annual CPI increased by 3.2% from 3.0% in December.

The USDJPY quotes fell to the price area around 149.00 during the Asian session, hitting a two-month low. The Japanese currency is strengthening amid rising GDP and inflation in the country, with investors expecting the Bank of Japan to tighten monetary policy further.

USDJPY technical analysis

The USDJPY H4 chart shows a steady decline, with the Alligator indicator confirming this impulse. The pair is trading in a descending price channel and has now tumbled to its lower boundary. The key support level is at 148.60.

The USDJPY forecast for today suggests that the pair will have the potential for a correction towards the 151.00 resistance level if the bulls bring the quotes back to the area above 150.00. Conversely, if the bears retain the initiative and keep the price below 150.00, the pair could decline to the 148.60-149.00 support area.

Summary

The Japanese yen is strengthening against the US dollar amid rising inflation and GDP in the country. Investors expect the BoJ to continue raising the benchmark interest rate this year.