The rate was raised, but the yen didn’t react: USDJPY continues to rise

The Bank of Japan raised the interest rate to 0.75%, but this has so far failed to support the yen. USDJPY quotes are trading around the 156.00 level. Details — in our analysis for 19 December 2025.

USDJPY forecast: key takeaways

• Bank of Japan interest rate decision: previous value – 0.5%, actual – 0.75%
• US Core PCE Price Index: previous value – 2.8%, forecast – 2.7%
• USDJPY forecast for 19 December 2025: 156.90 and 155.00

Fundamental analysis

The outlook for 19 December 2025 does not appear optimistic for the JPY. The USDJPY pair is forming an upward wave and is trading around the 156.00 level.

The Japanese yen continues to lose ground despite the tightening of monetary policy by the Bank of Japan (BoJ), which raised the interest rate to the expected level of 0.75%. The previous rate hike took place on 24 January 2025, after which the BoJ kept the rate unchanged at 0.5% for six consecutive meetings. By the end of the year, the rate has finally been increased, which may eventually improve the chances of yen strengthening and boost demand for JPY.

The US Core Personal Consumption Expenditures Price Index (Core PCE Price Index) reflects changes in the cost of a basket of goods and services actually consumed by households in the United States. This indicator is widely known as the PCE deflator and is used to assess underlying inflation trends in the economy.

Unlike several other inflation measures, Core PCE is based on a broader consumption framework. It includes both actual household spending and imputed costs, covering durable and non-durable goods as well as a wide range of services. At the same time, food and energy prices are excluded due to their high volatility, which may distort the overall inflation picture.

The USDJPY forecast for today takes into account that US Core PCE may decline to 2.7% from the previous 2.8%. While the projected decrease is not critical, weaker-than-expected data could pressure the US dollar and trigger a pullback in USDJPY.

USDJPY technical analysis

On the H4 chart, USDJPY has formed a Hammer reversal pattern near the lower Bollinger Band and is currently trading around the 156.00 level. At this stage, the pair may continue its upward wave as part of the pattern’s completion, with the growth target at 156.90.

At the same time, the USDJPY forecast also considers an alternative scenario in which prices decline toward the 155.00 level.

Summary

Despite the tightening of monetary policy by the Bank of Japan, the yen continues to lose ground. Technical analysis of USDJPY suggests a potential rise toward the 156.90 level.

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