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The U.S. Dollar Indexis currently trading at 99.23 on the 2-hour chart after dropping below the recovering channel from the August lows. What is interesting is how quickly the index was rejected at the 99.80 – 99.86 range. DXY lost 99.62, 99.48, and 99.35 very quickly, which shows how much the structure of the bullish recovery has weakened.

The first area I will be watching is 99.12, as the downwards support zone begins there. Breaking below this would expose 98.90, 98.72, and 98.56. In the opposite direction, looking at the previous support zone of 99.35 – 99.48 and adding 99.62, the resistance zone starts to form there.

RSI has dropped and begun to enter oversold territory, so a bounce in the index is possible, but I also believe that the DXY will drop furtherwhen trading below the 99.48 range. I will reverse that opinion if the index breaks above the 99.62 range, but I believe the rallies will be corrective in nature rather than a strong downtrend.

Westpac analysts expect USD/JPY to test 162 in September before retreating to 154 by end-2027 and 146 by the end of 2028.

The US Dollar to Japanese Yen (USD/JPY) exchange rate slipped to 159.6004 on Wednesday, leaving Westpac’s September forecast target of 162 around 1.5% above spot.

USD/JPY had climbed as high as 160.3872 during the previous 48 hours before reversing sharply, while the daily decline reached 0.37%.

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The chart above shows the pair giving back its advance through 160.30 and finishing near the bottom of its 159.4938-160.3872 range.

Westpac’s September call is effectively for one more test higher rather than an unprecedented breakout.

The pair traded as high as 163.9798 in July, so 162 has already proved reachable this summer.

What follows in Westpac’s forecast curve is far more interesting.

The bank sees USD/JPY easing to 160 in December and remaining there in March 2027, before falling to 158 in June, 156 in September and 154 at the end of next year.

The decline then continues at a remarkably steady pace: 152 in March 2028, 150 in June, 148 in September and 146 in December.

From the forecast peak of 162 to the final 146 target, that would be a 9.9% fall in USD/JPY and an appreciation of almost 11% for the Yen against the Dollar.

The Yen recovery is not built on aggressive Fed cuts

Westpac’s accompanying interest-rate forecasts make the currency path more striking.

The bank keeps the Federal Funds rate at 3.625% throughout the forecast period, rather than relying on a sizeable US easing cycle to pull USD/JPY lower.

It also expects the US 10-year Treasury yield to ease only modestly, from 4.65% in September to 4.55% in the first half of 2027.

The yield then rises gradually to 4.85% by December 2028, precisely when USD/JPY reaches 146.

In other words, Westpac is forecasting a major Yen recovery without a lasting collapse in US yields.

The published figures do not include a separate Japanese interest-rate path or written explanation for the move, so it would be wrong to assign the decline to one specific catalyst.

Still, the curve fits a market increasingly focused on whether Japanese policy can take over from direct currency support.

As we noted in our recent Yen analysis, intervention can deliver an abrupt move but has struggled to overcome the interest-rate gap for long.

Westpac’s numbers instead describe a slow adjustment lasting more than two years.

These are dated forecast points rather than promised trading stops, but the message is unusually clear: 162 may come first, while the bigger move is eventually lower.

Friday’s Japanese household-spending figures and US employment report provide the next test, with Westpac forecasting a 70,000 rise in payrolls against a market estimate of 55,000.

Our currency coverage draws on live market data, official economic releases and published bank research.

The GBPJPY pair formed a sharp decline yesterday, affected by the repeated negative pressures, surpassing the previously waited targets by reaching 214.95 level, to settle near 212.35 level as appears in the above image.

Providing extra negative momentum by stochastic makes us expect attempting to break 211.45 support, which represents a confirmation key for the main trend in the upcoming trading, breaking this support will confirm the continuation of the negativity, to expect forming the next target at 210.25 level, while holding above it will provide a chance for recovering the losses and forming new bullish waves.

The expected trading range for today is between 211.50 and 214.25

Trend forecast: Bearish

Created on September 03, 2026

This currency pair has spent recent months rewarding traders who were prepared to buy dips, but the market is beginning to look much less comfortable with that familiar pattern as the US Dollar stays strong.

The recent move lower is starting to look more convincing, with Sterling now not one of the stronger major currencies. This shift in the market’s perception of the British Pound may be the catalyst, combined with technical changes, that make this currency pair worth paying more attention to over the coming days.

The good news for traders is that the GBP/USD looks like it may behave very respectful of technical factors, which might make it interesting to trade now.

Why GBP/USD Is Bearish as Dollar Strength Returns

Both currencies can be seen as relatively strong and weak, with the US Dollar reasserting its earlier strength and starting to move more decisively higher. However, this will not be truly decisive until the US Dollar Index get established above the big round number at 100, which looks likely to be a pivotal point.

There is major US data due this week – average earnings and NFP – which could also give the relative value of the US Dollar a big push. In these cases, “accidents often happen along the line of least resistance”, so a trend can get a nice tailwind from a surprise.

Finally, technical factors are looking very strong and decisive, with some obvious lines in the sand which traders can use to gauge the picture.

GBP/USD Technical Analysis: Key Resistance at 1.3520

The price action has been decisively bearish for over one week now, ever since the price failed to break out to a new six-month high price above 1.3650 and began moving lower with a series of orderly breakdowns which flipped support to become new resistance levels. There has not even been one single true higher low in this entire movement until a few hours ago, and the early and light status of that makes it highly questionable.

Another factor which adds to the convincing nature of this bearish leg is the way this price action can almost completely be captured by a linear regression analysis study, which can be seen within the price chart below. When this feature can be drawn to make a price channel symmetric, it tends to be more reliable.

The standout support or resistance level which looks as if it could be pivotal today is the resistance overhead at 1.3520, which might extend as high as 1.3530 and will be confluent with the upper trend line of the descending price channel for most of the rest of today.

GBP/USD H1 Price Chart Showing Recent Impulsive Moves

The Blind Spot: Why the Short Case May Not Be Straightforward

The blind spot here may be an over-reliance on technical analysis. As a technical analyst, today’s chart of this currency pair jumps out as having meaningful indications. This probably makes me overconfident that a bearish scenario will play out over the near term.

Unless there is a major and unscheduled surprise from the Bank of England or even the European Central Bank, it is difficult to see what I might be missing, except maybe the tension between the USA and Iran escalating after the countries traded military blows yesterday. However, the situation seems to have de-escalated in recent hours, with no new US attacks last night. It is conceivable a Fed member might say something that is interpreted as dovish which could trigger a minor US Dollar selloff.

Risks to the Bearish GBP/USD Outlook

I see the dream scenario here for traders, especially day traders, is to hope for a retracement to the 1.3520 level which tests that area which rejects it forcefully – this could be a very good short trade entry signal.

Taking 1.3520 as the likely pivotal point, an alternative scenario will likely play out if the price can get established above that level today, which will open the door to a rise to 1.3554 – this 1.3550 has also recently acted as a very pivotal area, so this resistance level might play a significant role in what happens after that.

GBP/USD is worth watching because it is making a technical steady bearish move which is supported by fundamental, sentimental, and most of all technical indicators. If it continues moving lower, it has a long way to fall while remaining within its dominant range, suggesting there could be a good opportunity to get involved on the short side, although that moment might well not be arriving today. Alternatively, the pair may surprise, if the first potential lower high we saw form within recent hours produces an impulsive bullish move which breaks the resistance level at 1.3520.

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