The USD/JPY currency pair is showing a bearish trend that began on July 3, 2024, and is expected to continue declining toward the 136.50 level. In the short term, the price movement since the March 28, 2025 high is forming a zigzag pattern, according to Elliott Wave analysis.

From the March 28, 2025 high, the decline in wave (A) reached 139.89. This was followed by a corrective wave (B), which also unfolded as a zigzag. Within wave (B), the price rose to 144.03 (wave A), then dipped to 141.95 (wave B). Afterwards, it climbed to 145.90 (wave C), completing wave (B). The pair has since turned lower, starting wave (C).

Wave (C) is currently developing as an impulse pattern in Elliott Wave terms. From the May 2, 2025 high, the price dropped to 143.72 (wave (i)), then rallied to 145.08 (wave (ii)). The decline resumed, reaching 142.34 (wave (iii)). A corrective rally in wave (iv) is believed to have finished at 143.30. The pair is now expected to decline further to complete wave (v). This will finalize wave ((i)) in the larger structure. After this, a corrective rally in wave ((ii)) should occur, partially recovering from the May 2, 2025 high, before the downward trend resumes.

In the near term, as long as the high at 145.90 holds, any upward movements are likely to be limited and fail in a pattern of 3, 7, or 11 swings, leading to further declines.

USD/JPY 60 minute Elliott Wave chart

USD/JPY Elliott Wave [Video]

May 6, 2025 – Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: GBP Price Eyes 1.35 Resistance

The Pound US Dollar (GBP/USD) exchange rate advanced on Tuesday, in advance of the Federal Reserve’s interest rate decision on Wednesday.

At the time of writing, GBP/USD was trending near $1.3324. Up approximately 0.2% from the day’s opening level.

The US Dollar (USD) drifted lower on Tuesday amid investor caution ahead of the Federal Reserve’s imminent policy announcement.

With interest rates expected to remain unchanged, market attention is focused on the potential tone Fed Chair Jerome Powell’s will strike in his press conference and any clues he may drop about future monetary policy.

USD investors will be watching closely to see if the Fed expresses concern over slowing economic momentum and hints at the possibility of rate cuts in the months ahead.

At the same time, anxieties over US President Donald Trump’s trade policy also limited USD, following complications in talks with Japan.

Negotiations hit a roadblock as Japan rejected any proposal that maintained existing tariffs, a blow to hopes of a quick resolution.

Hopes for a refreshed UK-EU trade relationship helped to underpin the Pound (GBP) on Tuesday.

GBP investors are hopeful that a new ‘strategic partnership agreement’ to be signed at a summit on 19 May will lead to stronger economic ties between the UK and the continent.

This could offer a much-needed boost to the UK economy, although observers also warn it could complicate UK-US trade negotiations.

Looking ahead, the US Federal Reserve’s rate decision will act as the main catalyst for movement in GBP/USD over the coming sessions.

While a rate hold is priced in, attention will turn to Powell’s comments and whether the Fed signals a dovish shift.

However, President Trump’s reaction could generate just as much volatility. Any renewed criticism of the central bank or calls for immediate rate cuts might reignite fears over Fed independence, potentially dragging the US Dollar lower.

Meanwhile, investors may adopt a wait-and-see stance on the Pound ahead of the Bank of England’s interest rate decision on Thursday, limiting GBP movement in the short term.

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USD/JPY Technical Analysis

The dollar has fallen pretty significantly against the Japanese yen and clearly it looks like people are looking for a little bit of safety here. At this point, I still think we’re in the process of trying to do something about the whole idea of whether or not the Bank of Japan will be able to tighten their monetary policy, which I don’t think they’re going to. They somewhat blinked.

Furthermore, the US dollar in the FOMC will have a major say during the session on Wednesday. The interest rate differential still favors the dollar. And if they sound more hawkish than dovish, that could very well have an effect on this pair as well, sending it higher. I think the next 24 hours though, we sat sideways.

AUD/USD Technical Analysis

The Australian dollar continues to hover at very high levels, but I think we’ve got a situation where you have to look at this through the prism of a potential breakout. But again, I think we have to get through the FOMC before we can truly believe that a break above the 0.65 level opens up a much bigger move. Short term pullbacks, I think, see significant support at the 50 day EMA.

For a look at all of today’s economic events, check out our economic calendar.

May 6, 2025 – Written by Frank Davies

STORY LINK Pound-to-Euro Forecast: GBP Price Risk on “More Dovish” BoE

The Pound to Euro exchange rate (GBP/EUR) has again failed to sustain a move above 1.1765, but found support on dips and settled just above 1.1750. A plethora of fundamental factors continue to pummel currency markets, including this week’s Bank of England (BoE) interest rate decision.

MUFG noted mixed forces on the Pound; “A more dovish policy update from the BoE poses downside risks for the GBP in the week ahead, and could deliver a setback after the recent rebound.”

It added; “On the other hand, the GBP will derive support if financial market volatility continues to ease encouraged by building investor optimism over trade deals/agreements to reverse President Trump’s tariff plans especially involving China and the UK.”

ING does see scope for GBP/EUR to make gains once long Euro positions are cut; “We think EUR/GBP may stabilise around 0.850 for now as a well-telegraphed BoE cut should not trigger major moves. Ultimately, the euro’s greater exposure to potential positioning adjustments means the risks remain skewed to the downside for EUR/GBP.”

The current yield structure is continuing to underpin the Pound, but there is speculation that the BoE will be more aggressive in cutting interest rates.

Nomura expects such a dovish BoE shift and forecasts a GBP/EUR retreat to 1.15 at the end of June.

The UK PMI business confidence index was revised marginally higher to 49.0 for April from 48.9 in March, but still below the March figure of 52.5.

Overall business confidence dipped to the lowest level since October 2022.

Costs increased at the fastest rate since July 2023 while prices charged increased at the fastest rate for close to two years.

Tim Moore, Economics Director at S&P Global Market Intelligence, commented; “Business expectations for the year ahead fell sharply as service sector firms braced for an extended period of global economic turbulence and heightened recession risks.”

The PMI data illustrates major difficulties faced by the BoE with evidence of weaker demand at the same time as increased inflation pressures.

There are very strong expectations that the BoE will cut interest rates by 25 basis points to 4.25% this week.

There is also speculation that the Monetary Policy Committee (MPC) will change its guidance and suggest the possibility of a faster pace of rate cuts over the next few months.

MUFG commented; “One way for the BoE to signal that they are more open to the possibility of cutting rates again sooner perhaps at the following MPC meeting in June would be to drop guidance that “gradual” further withdrawal of monetary policy restraint is appropriate.”

Dovish guidance would tend to hurt the Pound.

The Euro-Zone PMI services sector was revised to 50.1 in the final April reading from the flash figure of 49.7, but still below the March figure of 51.0.

As far as prices are concerned, cost pressures dipped to a 5-month low with the slowest rate of output charges seen in 2025. The data will maintain pressure for further ECB interest rate cuts.

There was also a notable surprise in Germany as CDU leader Merz failed to gain a majority to be Chancellor in the Bundestag vote which will create further uncertainty.

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• GBP/USD trades above 1.3300 in the European session on Tuesday.
• The US economic calendar will not feature high-impact data releases.
• The near-term technical outlook fails to offer a directional clue.

GBP/USD stays in positive territory above 1.3300 in the European session on Tuesday after posting small gains on Monday. The technical outlook, however, fails to provide any directional clues as investors remain reluctant to take large positions ahead of the Federal Reserve (Fed) and the Bank of England’s (BoE) monetary policy meetings.

The US Dollar (USD) found support in the second half of the day on Monday and limited GBP/USD’s upside as markets assessed the US data.

The ISM Services Purchasing Managers Index (PMI) rose to 51.6 in April from 50.8 in March. Additionally, the Prices Paid Index of the PMI survey, the inflation component, climbed to 65.1 from 60.9, pointing to an acceleration in the input inflation in the service sector.

Meanwhile, growing optimism about the US coming to terms with its partners on trade helped the USD hold its ground. US Commerce Secretary Howard Lutnick told Fox Business that they are hoping to announce trade deals soon, while US Treasury Scott Bessent said that they are very close to reaching some agreements on trade.

Early Tuesday, the cautious market mood makes it difficult for GBP/USD to gather bullish momentum. At the time of press, US stock index futures were down between 0.6% and 1%. Nevertheless, a bearish opening in Wall Street could hurt the USD in the American session and allow GBP/USD to keep its footing.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays flat slightly above 50 and GBP/USD continues to fluctuate at around the 100-period, 50-period and 20-period Simple Moving Averages (SMA), highlighting a lack of directional momentum.

Looking south, first support could be seen at 1.3270 (Fibonacci 23.6% retracement of the latest uptrend) before 1.3240 (20-day SMA) and 1.3165 (Fibonacci 38.2% retracement). On the upside, immediate resistance is located at 1.3330-1.3340 (50-period SMA, static level) ahead of 1.3400 (round level, static level) and 1.3450 (static level).

• During the trading session on Monday, we have seen the US dollar fall significantly, only to turn around and show signs of life again.
• All things being equal, it is worth paying close attention to the ¥143.50 level, an area that was short term resistance before, and is now starting to offer a little bit of support.
• Furthermore, we have a lot of headlines out there that could cause all kinds of problems for currency pairs.
• This is especially true for the USD/JPY pair, as it is so highly sensitive to risk appetite in general.

Technical Analysis and the Federal Reserve

If we can break above the 50 Day EMA, marked in red on the accompanying chart, and sitting at the ¥146.33 level, I think there’s a real shot that the US dollar continues to go much higher. All things being equal, I suspect that we will probably go more sideways over the next several sessions, especially as the FOMC meeting and announcement comes out on Wednesday, which makes the market take a bit of a breather as we will have to wait to see what the Federal Reserve says.

It’s not so much what the Federal Reserve does, because they are not expected to cut interest rates, but it is going to be more or less the statement and the press conference that gives people the idea as to where the Federal Reserve may go with interest rates.

The Bank of Japan has already essentially flinched, meaning that they did not tighten monetary policy as they were worried about the overall tariff war, and this of course might be the excuse that lot of businesses and central banks use. In fact, we are already seen on Wall Street, with corporations using that as a way to get out of giving guidance. In general, I think the real story is that the Japanese cannot tighten rates, and the US dollar should rise over the longer term.

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