USDJPY enters a long-awaited correction: what comes next

The USDJPY pair has fallen to 163.45. The correction is welcome, but it does not invalidate the underlying uptrend. Find out more in our analysis for 29 July 2026.

USDJPY forecast: key takeaways

• The USDJPY rate has declined as part of a correction, but this does not negate the main trend
• The interest rate differential between the Federal Reserve and the Bank of Japan leaves the yen in a weak position
• USDJPY forecast for 29 July 2026: 163.12

Fundamental analysis

The USDJPY rate dropped to 163.45 as part of a correction. Even after this move, however, the Japanese yen remains close to a 40-year low. Investors are awaiting the Federal Reserve’s decision, with the regulator expected to leave interest rates unchanged.

At the same time, the market continues to estimate the likelihood of a 25-basis-point rate hike at approximately 33%. The chances of policy tightening in September are around 80%, supporting the US dollar and increasing pressure on the yen.

Geopolitical tensions have also returned to the forefront. The US military reported that it had intercepted an unexpected Iranian attack on American units stationed in the Middle East. This renewed risks in the region and pushed oil prices higher.

In Japan, the Bank of Japan is expected to hold interest rates steady on Friday. However, it may keep the door open to further hikes in an effort to curb the yen’s decline. Verbal intervention by the authorities has so far provided little support to the currency, while the regulator has yet to offer clear guidance on the timing and pace of policy tightening.

The USDJPY outlook is bullish.

Technical outlook

On the H4 chart, the USDJPY pair maintains its overall uptrend. However, the pair has now entered a notable correction and is trading near 163.45. The price has fallen below the middle Bollinger Band and is testing the indicator’s lower boundary, indicating increased short-term selling pressure.

The nearest support level lies at 163.12. A breakout below it would open the way towards 162.67. Resistance levels are located at 163.57 and 164.02. To resume growth, the pair needs to consolidate above 163.57; movement below this level would preserve the risk of a further decline.

MACD remains in positive territory, although bullish momentum continues to weaken. The Stochastic Oscillator is pointing downwards and has not yet reached oversold territory, so the correction may continue. The baseline scenario remains movement within the 163.12–163.57 range with a moderately bearish bias.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (intraday)
• Trend: bullish, short-term correction
• Key resistance levels: 163.57 and 164.02
• Key support levels: 163.12 and 162.67

USDJPY trading scenarios for today

Main scenario (Buy Stop)

A breakout and consolidation above the 163.57 resistance level would indicate the end of the correction and create conditions for the USDJPY pair to resume its main upward move.

• Take Profit: 164.02
• Stop Loss: 163.30

Alternative scenario (Sell Stop)

A breakout and consolidation below the 163.12 support level would confirm a continued correction and open the way towards the next support level.

• Take Profit: 162.67
• Stop Loss: 163.40

Risk factors

The main risk to the USDJPY bullish scenario remains possible currency intervention by the Japanese authorities. More hawkish signals from the Bank of Japan, US dollar weakness following the Federal Reserve meeting, or lower US Treasury yields could add to pressure on the pair. As long as the price remains above 163.12, the current correction does not invalidate the underlying uptrend.

Summary

The USDJPY pair has successfully completed its correction. The USDJPY forecast for today, 29 July 2026, suggests a local test of the 163.12 level without invalidating the main bullish scenario.

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