Created on August 27, 2026

The US dollar initially fell against the Japanese yen during the trading session here on Wednesday, as we are looking at a situation where traders are watching the Bank of Japan, and the carry trade.

USD/JPY

The US dollar initially fell against the Japanese yen during the trading session here on Wednesday but then turned around to show signs of life as traders continue to see a lot of volatility in this pair, as well as many others.

Ultimately, the carry trade is still very much in play here, and with the Bank of Japan intervening multiple times, we have seen a little bit of suppression of price discovery. But ultimately, this is a market that is trying to get back to the 160 yen level, an area where we have not only seen resistance previously multiple times going in the past, but we also have the 50-day EMA in the same region.

Carry Trade and Key Moving Averages

Short-term pullbacks at this point in time are likely to test the uptrend line that we have been in for some time, with the 200-day EMA sitting just below there to offer support, all things being equal. USD/JPY is a market that I will remain long of. I’ve been long in for months, and I’m actually buying little micro positions on each dip to build my carry trade portfolio.

If we can get above the 160 yen level on a daily close, then I think it opens up the possibility of a challenge of the 162 yen level, an area that I think will remain important from previous action. And then you start to worry about intervention again.

Nonetheless, the carry trade is a very real thing, and the Japanese can only get so tight. The speech at Jackson Hole on Friday from Kevin Warsh could be the next big mover here.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

The GBPJPY pair faced some bearish pressures due to its stability below 21.85 besides stochastic exit from the overbought levels, which forces it to form some corrective trading by facing the initial support near 216.35.

The price needs extra bullish momentum, which allows it to settle above the current support, to confirm its readiness to activate the bullish trend by targeting 217.15, repeating the pressure to find an exit for recording extra gains in the upcoming period.

The expected trading range for today is between 216.10 and 217.85

Trend forecast: Bullish

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Higher UK Energy Bills Weigh on Pound Rates

The Pound US Dollar (GBP/USD) exchange rate weakened on Wednesday as investors assessed the latest batch of US economic data.

At the time of writing, GBP/USD was trading at around $1.3605, down roughly 0.3% from Wednesday’s opening levels.

The US Dollar (USD) gained ground against most of its major counterparts on Wednesday after the release of the latest US core PCE price index.

The Federal Reserve’s preferred gauge of underlying inflation showed price growth remained unchanged at 3.3% in July, leaving it close to the two-year high of 3.4% recorded in May.

The lack of further progress in bringing inflation towards the Fed’s 2% target encouraged investors to increase their expectations for additional monetary tightening later this year, providing a boost to the ‘Greenback’.

The US Dollar also benefited from stronger-than-anticipated durable goods orders, with the latest figures showing a significantly larger increase in demand than economists had forecast.

The Pound (GBP) struggled on Wednesday as the announcement of a 4% increase in the UK’s energy price cap renewed concerns over pressure on household finances.

Although the rise had been largely expected after sustained disruption to energy supplies in the Gulf, investors remained wary that higher household bills could weigh on consumer spending and undermine the UK’s economic recovery.

There are also concerns that rising utility costs could feed through into inflation, creating another headache for the Bank of England (BoE) and potentially strengthening the case for further interest rate increases before the end of the year.

Near-Term GBP/USD Forecast: Fed Chair to Take Centre Stage at Jackson Hole

Looking towards the remainder of the week, attention will turn firmly to the Federal Reserve’s annual Jackson Hole symposium and any clues it may provide over the bank’s future policy direction.

New Fed Chair Kevin Warsh has so far favoured limiting forward guidance from the central bank. However, persistent inflation and renewed volatility in US bond markets could encourage him to offer greater insight into the Fed’s plans.

Investors may therefore remain cautious ahead of Warsh’s speech on Friday, potentially keeping the Pound to US Dollar (GBP/USD) exchange rate relatively subdued.

With the UK economic calendar offering little of note in the meantime, Sterling is likely to take its direction from broader currency market trends on Thursday.

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USD/JPY Forecast: 20-Day EMA Caps Upside as Yen Strength Persists

The USD/JPY pair continues to face strong resistance at the 20-day exponential moving average (EMA), as of the latest trading session, with the yen maintaining its recent strength against the dollar. This technical barrier has repeatedly capped upside attempts, keeping the pair within a tight range and signaling that sellers remain in control in the near term.

Why the 20-Day EMA Matters for USD/JPY

The 20-day EMA is a widely watched short-term trend indicator that traders use to gauge momentum and potential support or resistance levels. In the current USD/JPY setup, the pair has consistently failed to close above this moving average, indicating that the recent bearish momentum is still intact. As of this week, the 20-day EMA sits just above the current price, and each rally toward that level has been met with fresh selling pressure, reinforcing its role as a key barrier.

This technical pattern suggests that unless there is a decisive break above the 20-day EMA, the pair is likely to remain under pressure. A sustained move above this level could signal a shift in sentiment, but until then, traders are treating it as a sell zone. The repeated rejection at this moving average also reflects broader market dynamics, including the interest rate differential between the U.S. and Japan and the safe-haven demand for the yen amid global uncertainties.

Market Context and Broader Implications

The yen’s strength comes against a backdrop of shifting expectations for monetary policy. The Bank of Japan has signaled a gradual normalization of its ultra-loose policy, which has supported the yen. Meanwhile, the Federal Reserve’s path on interest rates remains uncertain, with market participants closely watching U.S. economic data for clues. These fundamental factors are aligning with the technical picture, as the yen benefits from a narrowing rate differential.

For traders, the 20-day EMA is not just a technical level but a reflection of the market’s current risk appetite. A failure to break above it could lead to further downside, with the next support levels likely to be tested. Conversely, a breakout would open the door for a retest of higher resistance zones. The ongoing tug-of-war between these forces is keeping the pair range-bound, and the resolution of this technical standoff will likely set the tone for the coming weeks.

What to Watch Next

Key levels to monitor include the recent swing lows and the psychological 150.00 mark, which has acted as a support zone in the past. On the upside, a close above the 20-day EMA would be the first sign of bullish momentum, followed by the 50-day EMA as the next hurdle. Fundamental catalysts, such as U.S. inflation data or comments from central bank officials, could also trigger a breakout or breakdown.

Given the current technical and fundamental alignment, the path of least resistance appears to be lower, but traders should remain flexible. The 20-day EMA will continue to be a critical level to watch, and a decisive move beyond it will likely define the next trend.

Conclusion

In summary, the USD/JPY pair is currently constrained by the 20-day EMA, which has proven to be a formidable barrier. The yen’s strength, driven by monetary policy expectations and safe-haven flows, is keeping the pair under pressure. Traders should monitor this level closely, as a break above or below could signal the next significant move. As always, combining technical analysis with fundamental context is essential for making informed trading decisions.

FAQs

Q1: What is the 20-day EMA and why is it important for USD/JPY?
The 20-day exponential moving average is a short-term trend indicator that smooths price data over the past 20 days, giving more weight to recent prices. For USD/JPY, it is currently acting as a resistance level, meaning the pair has struggled to rise above it, indicating bearish momentum.

Q2: What could cause a breakout above the 20-day EMA?
A breakout could be triggered by a shift in fundamental factors, such as a surprise change in U.S. or Japanese monetary policy, or a significant economic data release that alters market sentiment. A decisive close above the 20-day EMA would be the first technical confirmation of a bullish reversal.

Q3: How long can the 20-day EMA continue to cap the upside?
There is no set timeframe. The barrier will remain effective as long as sellers defend it. However, the longer the price stays below the EMA, the more likely a breakout becomes, as accumulation often occurs before a significant move. Traders should watch for volume and momentum indicators for clues.

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