Japan just posted a stronger than expected GDP reading, showing the economy can still grow even under heavy trade pressure from the U.S. The surprise came from resilient exports especially autos and a smaller trade deficit.
The yen ticked higher on the news, but USD/JPY is still trapped between familiar support and resistance levels. With the Fed expected to cut rates this year, the real question is whether this data can finally push the pair out of its range.
Here's what you need to know so far:
1. Japan’s Growth Surprised to the Upside
Q2 GDP rose 0.3% QoQ, triple the forecast and up from 0.1% in Q1. Annualized growth hit 1%, more than double the 0.4% projection. Exports were the key driver, adding 0.3 percentage points to growth despite a 25% tariff on autos shipped to the U.S. The trade deficit also narrowed from April to June.
#Japan’s GDP grew at an annualized 1.0% in Q2 2025, beating forecasts and avoiding a second consecutive quarter of contraction, signaling economic resilience.
The #BOJ’s policy of maintaining low interest rates contrasts with global trends, supporting domestic market growth
$EWJ— #FortunaTrading (#@fortunatrading1)
4:01 AM • Aug 15, 2025
2. The Yen Reacted, But the Move Was Modest
The yen edged about 0.1% higher to 147.6 after the release. The Nikkei 225 gained 0.59%, showing steady equity sentiment. The muted FX reaction suggests traders still see U.S. policy and yields as the bigger driver for USD/JPY.
3. Fed Rate-Cut Bets Keep the Dollar in Check
July U.S. CPI came in cooler than expected, lifting market odds for three Fed rate cuts this year to above 53%. Softer Fed expectations have capped USD/JPY rallies, keeping the pair from breaking above its 148.0 ceiling.
4. The Technical Picture Still Favors Range Trading
USD/JPY is holding within a tight range, with 146.5 as key support and 148.0 as resistance. Recent choppy price action shows traders are waiting for a clear catalyst before committing to a breakout in either direction.
A move above 148.0 could target 148.7, but the 200-day SMA and past selling pressure make it a tough hurdle. On the downside, a break below 146.5 would shift focus to 145.8, a level that has triggered rebounds in recent months.
With RSI mid-range, momentum is neutral, favoring range-trading strategies. Until fresh data from the U.S. or Japan sparks movement, traders may keep fading moves near the extremes.
The Takeaway:
Japan’s growth beat adds some bullish bias for the yen, but without a bigger shift in U.S. data or risk sentiment, USD/JPY may stay range-bound for now, offering short-term traders clean fade setups near the edges.