Some policymakers think that the policy rate in Japan is still low. This indicates that the BOJ could be forced to hike interest rates again in the near future.

But there is still some risk. One policymaker opposed the June increase due to downside risks to output and jobs. The government also wants BOJ to avoid excessive pressure on the economy. This creates uncertainty. But the strong wholesale inflation and the pressure from the weak yen could compel the BOJ to continue tightening.

USDJPY Forecast: Breakout Risk Builds Above 162 Resistance

Fed and BOJ Policy Gap Keeps USDJPY in Focus

The USDJPY now hinges on the spread between the interest rates of the United States and Japan. The Fed funds rate will likely not change until September. But the BOJ has already tightened rates and may raise rates again later this year. This means that both central banks are tightening at different speeds and times.

The dollar could remain strong if markets continue to price a September rate hike by the Federal Reserve. The sticky inflation provides the Fed with a rationale to maintain the hawkish stance. Currently, the 10-year US Treasury yield is dropping to 4.2% due to the lower oil prices. If yields start to rise again after this support, then USDJPY could maintain its strength. This is because the stronger US rates continue to make the dollar attractive against the yen.

But if the BOJ hints at faster rate hikes, the yen could begin to rally. The inflation pressure in Japan is intensifying and being exacerbated by the weak yen. Japanese yields may go up further if the BOJ takes any steps towards the neutral rate. This would narrow the rate spread and may limit upside in USDJPY.

Technical Analysis Points to Breakout Risk Above 162

The daily chart for USDJPY shows that the pair is consolidating at the strong pivotal resistance zone of 160 to 162 in the short term. However, the strong consolidation at the resistance line indicates bullish price action. Therefore, a break above the 162 level will likely trigger a strong move to the upside.

The formation of double bottom pattern in January and February 2026 and then in May 2026 indicates strong bullish price action and supports a bullish rally. But if the pair corrects back towards the 158 to 157 level, it will likely attract a fresh buying opportunity.

The US Dollar to Yen (USD/JPY) exchange rate has climbed to around 161.75, extending its rally to fresh multi-year highs as investors continue to favour the US Dollar.

Citi remains constructive on USD/JPY in the near term, raising its three-month forecast to 161.50, but expects the pair to retreat to 153 over the following six to 12 months.

The bank believes strong gains in Japanese equities have encouraged Yen selling and helped push USD/JPY back towards its 2024 highs. Citi also expects Japanese authorities to continue intervening in the foreign exchange market to support the Yen.

According to the bank, “the JPY-buying intervention since the end of April has already topped JPY11trn”, and it believes intervention “could swell further to around JPY30trn.”

Looking further ahead, Citi expects the policy gap between the Federal Reserve and the Bank of Japan to narrow as the BoJ continues normalising monetary policy while the Fed ultimately falls short of current market expectations for further tightening.

The bank also argues that rising Japanese government bond yields are making domestic assets increasingly attractive for both local and overseas investors, supporting capital inflows into Japan.

In Citi’s view, “USD/JPY will correct lower toward 153 by the end of this year” as narrowing rate differentials and improving capital flows provide stronger support for the Japanese Yen.

– Written by


David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: USD Rally Pauses, GBP Remains Under Pressure

The Pound to Dollar exchange rate (GBP/USD) attempted to stabilise after falling to seven-month lows below 1.3150, as the recent surge in the US Dollar paused.

While Sterling found some support as Treasury yields eased and oil prices extended their decline, investors continue to favour the Dollar amid expectations of stronger US economic growth, resilient capital inflows and the prospect of higher Federal Reserve interest rates.

GBP/USD Forecasts: Recovery from 7-Month Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to fresh 7-month lows below 1.3150 on Wednesday before a tentative rally to 1.3190 on Thursday.

The dollar has gained further underlying support from reservations over volatility in the tech sector and expectations of underlying capital inflows into US assets. Gold has remained under pressure

US short-term yields, however, have fallen amid further losses in oil prices and this will tend to limit the scope for further dollar gains, especially if equities make headway.

GBP/USD still needs to make further headway to ease downward pressure. UoB commented; “a breach of 1.3200 would indicate that GBP is more likely to range-trade rather than testing 1.3135.” Key support remains around 1.30.

Domestically, markets were looking for further hints on who Burnham would choose as Chancellor if he succeeds Starmer as Prime Minister.

Current Chancellor Reeves has backed Burnham as leader, but the chatter continues to suggest strongly that she will be replaced with markets watching UK bond markets.

ING commented on the US currency; “The dollar seems to have halted its run on some risk sentiment stabilisation, but it’s still early to rule out another leg higher in the greenback. Any new signs of AI jitters could be the catalyst for more safe-haven-related dollar demand.

The bank added; “At the same time, our baseline view remains that we are not far from the peak in this dollar rally.”

According to MUFG; “If the Fed is serious about restoring price stability, a significant tightening of monetary policy will be required so it makes sense that more hikes have been priced in recently encouraging a stronger US dollar.”

It added; “We expect the US dollar to continue to trade at stronger levels until it is either challenged by incoming economic data showing slowing inflation and/or any indications from the Fed that they will not follow through with rate hikes.”

Standard Chartered head of global G10 currency research Steve Englander sees the potential for dollar demand; “We believe the move in rates and the dollar reflects expectations of cyclical and structural U.S. economic outperformance.”

He added; “Strong productivity growth, partly AI-driven, should support higher earnings and lead to dollar-positive capital inflows.”

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TAGS: Pound Dollar Forecasts

2026.06.26 2026.06.26
GBP/USD: Elliott Wave Analysis and Forecast for 26.06.26–03.07.26

Alex Geutahttps://www.litefinance.org/blog/authors/alex-geuta/

Major Takeaways

• Main scenario: Consider short positions from corrections below the level of 1.3314 with a target of 1.2936–1.2735. A sell signal: the price holds below 1.3314. Stop Loss: above 1.3355, Take Profit: 1.2936–1.2735.
• Alternative scenario: Breakout and consolidation above the level of 1.3314 will allow the pair to continue rising to the levels of 1.3660–1.3870. A buy signal: the level of 1.3314 is broken to the upside. Stop Loss: below 1.3275, Take Profit: 1.3660–1.3870.

Main Scenario

Consider short positions from corrections below 1.3314 with a target of 1.2936–1.2735.

Alternative Scenario

Breakout and consolidation above 1.3314 will allow the pair to continue rising to the levels of 1.3660–1.3870.

Analysis

On the weekly time frame, an ascending wave of larger degree (A) of B is developing. Within it, wave 1 of (A) formed, and a downward correction completed as wave 2 of (A). On the daily chart, wave 3 of (A) is unfolding, with wave i of 3 formed and bearish correction ii of 3 developing. On the 4-hour chart, wave (c) of ii is continuing to develop, with wave iii of (c) unfolding as its part. If the presumption is correct, GBP/USD will continue to decline to the levels of 1.2936–1.2735. The level of 1.3314 is critical in this scenario as a breakout above it will enable the pair to continue rising to the levels of 1.3660–1.3870.

This forecast is based on the Elliott Wave Theory. When developing trading strategies, it is essential to consider fundamental factors, as the market situation can change at any time.

Price chart of GBPUSD in real time mode