The US Dollar to Yen (USD/JPY) exchange rate remains close to multi-decade highs and is trading around 160.20 after repeatedly testing the 160 level over recent weeks.

Citi expects USD/JPY to remain elevated in the short term but continues to forecast a move lower towards 155 by the end of the year. The bank believes the 160 area should act as an effective ceiling for the currency pair.

According to Citi, the recent resilience of USD/JPY is surprising given that long-term interest-rate differentials between the US and Japan have narrowed significantly, a development that would normally support Yen appreciation.

The bank argues that strong hedging-related Yen selling linked to record-high Japanese equity holdings has become a key factor supporting USD/JPY and offsetting the impact of narrower yield spreads.

Citi’s proprietary valuation models suggest that current USD/JPY levels remain broadly justified by market fundamentals and international capital flows. The bank’s analysis indicates there is no major mispricing in the pair at present.

The bank identifies Japanese equities and the broader US Dollar trend as the two most important drivers of USD/JPY, with interest-rate spreads still playing a significant role in determining direction.

While Citi remains constructive on the Yen over the medium term, it believes that any meaningful short-term decline in USD/JPY would likely require further Bank of Japan policy normalisation and additional currency support measures from Japanese authorities.

For now, Citi expects USD/JPY to remain close to current levels, but continues to forecast a gradual correction lower towards 155 as monetary policy normalisation and a moderation in Yen-selling flows begin to support the Japanese currency.

• The Euro has been somewhat resilient during the trading session on Monday after initially gapping lower.

• The 1.15 level is a bit of a support level that I think a lot of people will watch from the psychology standpoint, but I also recognize that the interest rate differential will continue to favor the United States dollar, and the 200-day EMA sits just above the 1.16 level.

The 1.16 level will continue to be important, not only from the 200-day EMA showing up, but it’s also a significant barrier. Ultimately, this is a market that I have no interest in buying, and I do think that any signs of exhaustion will end up being an opportunity to get short again.

Consolidation Range and Market Drivers

The 1.14 level below would be my target overall, as it is the market being stuck in a larger consolidation range. The 1.1850 level above is your ceiling in this pair. The 1.14 level, of course, will be important, and if we were to break down below there, then we could see the EUR/USD market go much lower.

Ultimately, I think this is a market where you continue to see the US 10-year yield be the main driver. And it is worth noting that eventually it fell after spiking higher right around the New York open, but we’ve seen it turn right back around.

Ultimately, I think Europe has major problems, and that will also be perhaps driven by the idea of energy inflation or, worse yet, a lack of energy for the German industrial sector. The United States continues to see inflows, and I think that is your main story here.

Ready to trade our EUR/USD daily forecast? Here’s a list of some of the top forex brokers in Europe 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 EURJPY pair resisted the negative pressure, ending the negative attempts by providing positive close above the extra support at 184.25, forming some bullish waves to settle near 185.00.

The contradiction of the main indicators will force the price to provide intraday mixed trading, to expect activating the bullish attempts if it settles above the mentioned support to target 185.50 level, reaching the barrier at 186.00, while the return to settle below the extra support will confirm the dominance of the negative scenario, forcing it to suffer several losses by reaching 183.55.

The expected trading range for today is between 184.25 and 185.45

Trend forecast: Bullish

– Written by


David Woodsmith

STORY LINK Pound-to-Dollar Forecast: Triple Dollar Boost Pushes GBP to 3-Week Lows

The Pound to Dollar exchange rate (GBP/USD) fell to fresh three-week lows as a powerful combination of rising geopolitical tensions, weaker investor risk appetite and growing expectations of higher US interest rates boosted demand for the US Dollar.

With markets increasingly pricing in the possibility of Federal Reserve rate hikes later this year, Sterling remains under pressure despite showing signs of resilience around the key 1.3300 support level.

GBP/USD Forecasts: Slides to 3-Week Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to 3-week lows just above 1.3300 on Monday before looking to stabilise.

The Pound was still relatively resilient given the underlying conditions, but the dollar benefitted from renewed ge-political concerns, weaker risk conditions and expectations of higher US interest rates. The dollar index was close to 2-month highs.

GBP/USD survived a test of 1.33 in May, but any slide through this area could trigger losses to 1.3160.

UoB commented; “A break below this level is not ruled out, but deeply oversold conditions suggest GBP might not be able to maintain a foothold below this level.”

Middle East tensions increased again on Monday following Israeli attacks on Iran in retaliation for Iranian missile launches against Israel and oil prices secured renewed gains.

ING commented; “The geopolitical backdrop is also shifting dollar-positive, with most surprised that Brent is not trading even higher now that Iran and Israel are directly exchanging fire.”

Equity markets registered sharp losses on Friday and the mood remained defensive on Monday while US bond yields moved higher. According to ING; “An unwind of risk assets and especially an unwind of emerging market positions is normally dollar-positive.”

As far as the US economy is concerned, the latest jobs report was stronger than expected with an increase in non-farm payrolls of 172,000 for may compared with consensus forecasts of around 85,000 while the April increase was revised higher to 179,000 from the 115,000 reported previously.

MUFG commented; “Stronger employment growth alongside upside risks to the inflation outlook from the energy price shock in the Middle East has encouraged market participants to price in multiple rate hikes from the Fed in the year ahead.”

ING looked at the important US inflation indicators this week; “At some point, that expected tightening will be too aggressive, but we cannot see that story being unwound this week. This is because it is another week for US price data, where the May headline CPI reading is expected to push through 4% year-on-year, and PPI final demand should remain near 6% YoY.”

Capital Economics chief markets economist Jonas Goltermann also expects higher US rates; “The U.S. payrolls report paints a picture of a U.S. labour market that is strengthening despite the ongoing energy price shock.”

He added; “That combination makes policy tightening by the Fed later this year increasingly probable. We now expect the FOMC to deliver two 25 basis-point rate hikes later this year, in response to the energy supply shock and the re-acceleration of the U.S. labour market.”

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TAGS: Pound Dollar Forecasts

2026.06.09 2026.06.09
Yen Under Pressure As Interventions Yield Little Result. Forecast as of 09.06.2026

Dmitri Demidenkohttps://www.litefinance.org/blog/authors/dmitri-demidenko/

Japan’s previous interventions in the Forex market, totaling $73 billion, have yielded no results. Moreover, the sale of US Treasuries has boosted yields worldwide. In other words, it has damaged Japan’s debt market. Let’s discuss this topic and develop a trading plan for the USD/JPY pair.

Major Takeaways

• The Forex market is bracing for currency interventions.
• Investors are anticipating a rate hike by the BoJ.
• Japan needs to choose the lesser of two evils.
• Short positions can be opened if the USD/JPY pair drops below 159.85.

Weekly Fundamental Forecast for Yen

Forewarned is forearmed. Investors are ramping up hedging against a surge in yen volatility to levels not seen since October 2022. At that time, Japan resorted to currency intervention for the first time in many years to halt the rally in USD/JPY quotes. The pair is hovering near the psychologically important 160 level, making it extremely vulnerable to interventions.

Demand for Hedging Against Volatility Surge

Source: Bloomberg.

The authorities do not want a weak yen, which fuels inflation due to rising import prices. This leads to higher bond yields and increases the cost of servicing the massive national debt. The government is turning to currency interventions, fearing that other methods will not be as effective. For example, the Bank of Japan’s tightening of monetary policy risks triggering an even sharper rise in debt market rates.

However, money alone cannot solve the problem. Japan spent roughly $73 billion on its previous foreign-exchange intervention, while its securities holdings declined by a similar amount. Much of these assets consisted of US Treasuries. Selling them to fund further interventions would not only risk provoking the US but could also push bond yields higher globally, including in Japan.

Japan’s Foreign Exchange Reserves

Source: Bloomberg.

Meanwhile, as speculators remain wary of currency interventions and reluctant to push USD/JPY quotes higher too sharply, policymakers are trying to avoid making matters worse.

There had been hopes that a resolution to the conflict in the Middle East would push oil prices lower and ease inflationary pressures in the United States. Such a scenario would weaken the US dollar by reducing both safe-haven demand and the likelihood of further Fed rate hikes. Instead, the conflict continues to escalate.

The yen remains fundamentally weak, while the government is throwing money away and trying to figure out how to avoid making things even worse with currency interventions. The only way out seems to be choosing the lesser of two evils. According to Mitsubishi UFJ Asset Management, the Bank of Japan must aggressively raise the overnight rate to strengthen the yen. Although the futures market indicates a 90% probability of a monetary tightening in June, the company believes that a 25-basis-point increase is insufficient. A 50 or 75-basis-point hike is needed.

The government and speculators are not in an enviable position. Policymakers are wary of the consequences of currency intervention, while traders are reluctant to take on excessive risk and face potential losses.

Weekly USDJPY Trading Plan

If the conflict in the Middle East continues, its impact on the Forex market will allow investors to buy the dip in the USD/JPY, just as they did in May. On the other hand, a US-Iran deal would be a game-changer. In the event of a sharp downward move, the pair can be sold on breakouts of 159.85 and 159.7.

This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.

Price chart of USDJPY in real time mode

Following last week’s surge in the US dollar, there was some further upside initially and that caused the EUR/USD to fall to 1.15 handle first thing this morning, before bouncing back. The euro initially fell further as oil prices extended their gains on fresh escalation in the Middle East conflict with Iran and Israel exchanging fires. However, the moves unwound slightly by late morning London trade as Trump said that Israel and Iran were looking to do an immediate ceasefire. The US president said, “final negotiations are proceeding, subject to stupidity getting in its way.” Oil prices pared earlier gains and then turned negative after Ian reportedly declared end of military operations against Israel. Looking ahead, US CPI and ECB’s rate decision are among the important macro events for the EUR/USD forecast this week.

Dollar looking to advance gains

Last week, the greenback rallied after a much stronger-than-expected labour market report prompted investors to reassess the outlook for Federal Reserve policy, sending yields higher.  Looking ahead, we have US CPI and ECB rate decisions looming this week. Traders are also watching oil prices and the US-Iran-Israel situation. Hopes for a potential deal between the US and Iran to open the Strait of Hormuz faded after the latest escalation in the conflict. But with oil prices turning red on the day and still holding in the existing ranges, markets are still betting that the strait will re-open soon. 

The US dollar gain strong momentum last week as investors increasingly factored in the possibility of tighter monetary policy, while the sell-off in stocks also reinforced demand for the greenback. Expectations of tighter monetary policy gained ground on the back of a strong US jobs report, which pointed to a labour market that has regained momentum during the first half of 2026, reducing concerns about an imminent slowdown in economic activity.

Traders have now fully priced in a quarter-point Federal Reserve rate increase by year-end, a notable shift from expectations just a few weeks ago.

This week’s US inflation releases could reinforce that view. Consensus forecasts suggest headline CPI may move to 4.2% year-on-year in May, while producer price pressures remain elevated. With the Federal Reserve entering its pre-meeting blackout period ahead of the June FOMC decision, policymakers have limited ability to push back against increasingly hawkish market pricing.

As a result, the dollar may continue to attract support heading into the meeting, particularly as investors anticipate the Fed could adopt a firmer policy stance and further distance itself from any perception of easing.

Keep an eye on equity markets

The US dollar could find haven flows if we see fresh selling in the tech space, following Friday’s big plunge. While the upcoming SpaceX IPO might bring out the bulls again, currencies with strong links to global sentiment may remain particularly vulnerable if weakness in the sector persists. Today, though, index futures were higher as markets attempted to regain their poise after Friday’s drop. But should we see another sharp retreat from risk assets this week, this would most likely favour the dollar against high beta currencies. Meanwhile, geopolitical developments continue to underpin safe-haven demand for the greenback. That said and despite the escalation of direct hostilities between Iran and Israel, oil prices have remained relatively contained.

Will it be a hawkish ECB hike or a dovish one?

The ECB is likely to maintain a firm tone despite growth concerns, when it meets to decide on policy on Thursday. The single currency came under heavy pressure against the dollar at the end of last week, reflecting the broad-based strength of the greenback. But we could see some euro-specific movements this week if the ECB turns out to be more hawkish or dovish than markets are expecting. The central bank is widely expected to raise its deposit rate by 25 basis points to 2.25%. More important than the rate move itself will be the tone of the accompanying guidance.

A relatively hawkish message remains the most likely outcome. Policymakers are expected to leave the door open to further tightening later in the year amid the energy market uncertainty. The challenge for the ECB is that growth indicators are beginning to soften all thanks to the developments in the Gulf. At the same time, renewed strength in energy prices complicates the inflation outlook. This combination of slowing growth and persistent price pressures may leave the EUR/USD forecast struggling to gain bullish traction.

Technical EUR/USD forecast

The EUR/USD is likely to remain under pressure, despite today’s bounce back. For now, the 1.1500 level has held firm. This will continue to act as a key battleground this week. A sustained move away from here may prove difficult while markets remain focused on the prospect of further Fed tightening. But with the prior bullish price action failing to lead to any bullish breakthrough, the risks remain tilted to the downside.  A clean breakdown below 1.1500 would bring the March low of 1.1410 into focus, barring a plunge in oil prices – say as a result of a deal between the US and Iran to re-open the Strait of Hormuz. Resistance is now seen around the 1.1570-1.1600 area, followed by 1.1670 and then 1.1700.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The euro has been very noisy against the Japanese yen, but it is squeezing out a little bit of an attempt to break to the upside. The 185-yen level continues to be an area that I’ll be watching very closely, especially now that the 50-day EMA sits just 6 pips above there.

If we can clear both of those, then I think that will allow this market to continue going higher. The interest rate differential continues to favor Europe, and it probably will for as long as I can imagine, and therefore, I like buying short-term dips.

The Japanese yen has been under severe pressure against multiple currencies, and that remains the case as the Bank of Japan really won’t be able to do much as far as tightening monetary policy beyond maybe another 25 basis points.

AUD/JPY Technical Analysis

The EURJPY pair didn’t manage to settle at 186.00, forcing it to activate the negative trend again, affected by stochastic reach below 50 level, suffering several losses by reaching 184.38.

Today’s forecast depends on the attempt of forming a new support at 184.25 level, and its stability makes us expect renewing the positive attempts to reach 184.45, then repeat the pressure on the previously mentioned barrier, while breaking the current support and holding below it will confirm the readiness of targeting new bearish stations, to expect reaching 183.75 and 183.50.

The expected trading range for today is between 184.25 and 185.45

Trend forecast: Bullish

– Written by


Frank Davies

STORY LINK Pound-to-Dollar FX Forecast: Fed Hike Talk Boosts USD, Pressures GBP

The Pound to Dollar exchange rate (GBP/USD) remains under pressure after stronger-than-expected US employment data reinforced expectations that the Federal Reserve could keep interest rates higher for longer.

With markets increasingly debating whether the next Fed move could be a hike rather than a cut, the dollar has regained momentum and pushed GBP/USD back towards the lower end of its recent trading range.

GBP/USD Forecasts: Pressure on the Fed

MUFG sees the risk of a GBP/USD decline to at least 1.32 in the near term before a limited net recovery to above 1.35 at the end of 2026.

Bank of America is still positive on the Pound outlook with scope for GBP/USD gains to at least 1.40 late in 2026.

There has been a shift in US rate expectations which has underpinned the dollar and GBP/USD dipped to test support below 1.34 on Friday after stronger than expected US jobs data.

ING commented; “There is a creeping view that US growth could be re-accelerating as AI investment seeps through the broader economy. Healthy jobs data and higher pricing intentions from this week’s ISM business surveys can add to expectations that the Fed ends up hiking this year. We expect the dollar to remain supported.”

MUFG notes the balance of risks have shifted; “While the argument put forward of the need for a rate hike in the US remains unconvincing in our view it is clear that the debate on Fed policy has shifted from no change or a cut to no change or a hike with most comments from Fed officials now assessing the risks between a hike or no hike.”

Bank of England policy will also be a key factor, especially with splits within the committee. Markets are not expecting a June rate hike with around a 50% chance of a July hike with investment banks still uncertain.
ING narrowly expects a prolonged pause by the BoE, but added; “we’re not ruling out a July hike if the Strait of Hormuz remains heavily disrupted. And it’s why we’re likely to see a greater number of officials vote for a rate hike later this month.”
MUFG commented; “we still expect the BoE to deliver two rate hikes this year, but we have pushed back the timing to July and November from June and July previously.”

It added; “With no signs of wage setting behaviour changes and inflation expectations relatively stable, the BoE can afford to wait a little longer.”

Bank of America is positive on the UK outlook; “Yet, as the AI revolution is still seen as a US phenomenon, the UK has emerged as an attractive destination for AI-linked inflows on top of well-established financial services and biotech influx from overseas.

It added; “It perhaps provides a reason why GBP has been resilient against the backdrop of ongoing political uncertainty. Further out, a higher productivity/capital intensive mix of FDI inflows should be seen as a medium-term positive for GBP valuation trend.”

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TAGS: Pound Dollar Forecasts