USD/JPY: Head and Shoulders Pattern Could Trigger Break Below 146 Neckline

Talks to end the war in Ukraine are picking up pace. After US President Donald Trump met with his Russian counterpart Putin on Friday, European leaders joined the former in Washington yesterday. There are still no clear details, but all sides say progress is being made. Investors will be watching closely if these talks move toward something real.

For , the Bank of Japan is the main driver. Governor Ueda signaled there is no rush to raise , which has added more uncertainty ahead of the next meeting. On the US side, markets are leaning heavily toward a 25bp rate cut from the . Fed Chair Jerome Powell’s speech at later this week could confirm that view.

Can US Pressure Push the BoJ Toward a Rate Hike?

US Treasury Secretary Scott Bessent recently pointed out that the Bank of Japan is behind schedule on raising rates given recent and . His remarks also hint at Washington’s trade agenda, where a stronger yen would help narrow the US trade deficit with Japan.

BoJ officials, led by Governor Ueda, disagree that they are late in hiking rates. Their main focus right now is steady wage growth, which they see as the key condition for further tightening. A Reuters poll shows most economists expect at least one rate hike by the BoJ this year, though it may not come at the next meeting.

September Cut in Play, but the Fed Faces Tough Choices

The Fed’s next meeting is less than a month away, and markets still see an 80–90% chance of a 25bp rate cut. The key question is whether the Fed will deliver. The shows signs of slowing, but sticky limits how much room policymakers have to ease.

Markets are split, but the slightly more popular bet is for two 25bp cuts by year-end.

USD/JPY Technical Analysis

Since mid-April, USD/JPY has been in a broad correction, moving within an upward channel. Right now, the key technical pattern to watch is a possible head and shoulders, with the neckline around the 146 support level.

If USD/JPY breaks below this zone and the lower channel boundary, the next target could be around 142. This move would become more likely if the Bank of Japan signals that a rate hike at the upcoming meeting is possible.

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