USD/JPY targets 142 as Nomura shorts on Fed dovishness, BOJ hike risk

USD/JPY faces increased selling pressure as Nomura strengthens its short position following Powell's dovish Jackson Hole speech, targeting 142.00 by October. The investment bank cites dual pressures on the pair: Federal Reserve's likely September rate cut with 84% probability priced in, and rising Bank of Japan rate hike expectations creating a narrowing interest rate differential. Powell's acknowledgment of labor market risks and potential need for policy adjustment has shifted market sentiment decisively dovish on the dollar. Meanwhile, the yen finds additional support from BOJ's gradual policy normalization path, contrasting sharply with the Fed's easing trajectory. The pair currently trades near 147.50 after recovering from Friday's post-Powell selloff, but technical indicators suggest further downside momentum. Key support levels to watch include 145.00 psychological level and 142.00 target, while resistance sits at 148.00. Traders should monitor both central banks' communications and upcoming economic data for directional clarity.