Key events today:

25.07 12:30 UTC: USD – Durable Goods Orders change.

The yen is strengthening for the fourth consecutive session, supported by both domestic and external factors. This week’s US-Japan trade agreement reduced geopolitical uncertainty and raised expectations that the Bank of Japan may begin a moderate tapering of stimulus by year-end.

An additional factor was Tokyo inflation slowing to 3.3%, easing pressure on real household incomes, while the trade balance surplus remains stable. Meanwhile, the yield spread between 10-year JGBs (around 1.05%) and their US counterparts narrowed by 10 bps over the week, slightly reducing the dollar’s appeal.

On the other hand, Powell’s hawkish comments are limiting the pair’s decline, but signs of possible verbal intervention by Japan’s Ministry of Finance near the 147 level are increasing speculators’ caution. Given these fundamentals, a correction toward 145 looks likely, especially if US jobless claims data surprises to the upside, boosting risk-off demand for the yen.

Recommendations: SELL 147.30, SL 147.50, TP 146.00.