Tag: USD/JPY

• The USD/JPY forecast shows a pullback in the yen.

• Trump’s tariff on steel and aluminium imports came into effect on Wednesday.

• Traders are looking forward to the US CPI report.

The USD/JPY forecast shows a pullback in the yen as the focus shifts to the impact of Trump’s tariffs on Japan’s export-reliant economy. At the same time, fears of the US recession kept the dollar under pressure. However, the greenback rebounded ahead of the US CPI report to gauge the outlook for Fed rate cuts.

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The yen pulled back from recent highs as Trump maintained his aggressive stance on tariffs. On Wednesday, his tariff on steel and aluminium imports came into effect, igniting a trade war with the Eurozone. This has also shone a light on the looming reciprocal tariff. 

Trump’s tariffs will significantly impact the global economy. This includes Japan’s export-reliant economy. As a result, demand for the yen eased on Wednesday. Investors are seeking safety in other assets like gold. 

Meanwhile, the Bank of Japan remains hawkish on policy. Companies in Japan agreed to more wage hikes on Wednesday, setting in place the right conditions for rate hikes. As a result, market participants expect more rate hikes this year. However, the next move might come in May. 

Meanwhile, traders are looking forward to the US CPI report. Economists expect inflation to increase by 0.3%, lower than the previous reading of 0.5%. Meanwhile, the annual figure might ease to 2.9%.

USD/JPY key events today

• US Core CPI m/m
• US CPI m/m
• US CPI y/y

USD/JPY technical forecast: Bulls approach the 149.00 resistance

On the technical side, the USD/JPY price has broken above the 30-SMA, indicating a bullish shift in sentiment. At the same time, the RSI has broken above 50, indicating stronger bullish momentum. This shift came after the RSI made a bullish divergence. While the price made a lower low, the RSI made a higher one, showing weaker momentum. This allowed bulls to return to the market. 

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However, the price has to break above the 149.00 resistance level to confirm a new bullish trend. Moreover, it must start making higher highs and lows. On the other hand, if the 149.00 resistance holds firm, USD/JPY will return to retest the 147.00 support. A break below this level will make a lower low, confirming a continuation of the previous downtrend.

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• The USD/JPY forecast shows higher demand for the yen.

• The yen rallied last week amid uncertainty regarding the global economy.

• The US economy added a smaller-than-expected 151,000 new jobs in February.

The USD/JPY forecast shows higher demand for the yen due to US trade policy uncertainty and a weak dollar. Market participants remain concerned about the impacts of Trump’s tariffs on the global economy. At the same time, labor market data on Friday confirmed fears of a slowdown in the US economy. 

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Last week, the yen rallied as uncertainty regarding the global economy led to a migration from risky assets. Trump initially implemented tariffs on Canada, China, and Mexico, causing panic in the market. However, he later suspended tariffs on Canada and Mexico for another month. Still, it was not enough to ease trade war fears since Canada and Mexico are ready to respond to tariffs. Moreover, starting in April, Trump promised a reciprocal tariff on more countries. 

Elsewhere, data on Friday revealed that the US economy added 151,000 new jobs in February. This number came in below the forecast of 159,000. Meanwhile, the unemployment rate rose to 4.1%, above estimates of 4.0%. The weak labor market data increased expectations for Fed rate cuts. Currently, traders are pricing three rate cuts in 2025. The more dovish outlook has weighed on Treasury yields and the dollar.

USD/JPY key events today

Market participants do not expect any high-impact reports from the US or Japan. Therefore, the price might consolidate.

USD/JPY technical forecast: Bears looking to break the 147.00 support

On the technical side, the USD/JPY price has paused near the 147.00 support level. However, it remains below the 30-SMA, with the RSI under 50, supporting a bearish bias. The price maintained a downtrend below the 30-SMA until it reached the 149.00 key level. There was a consolidation period as the price broke above the SMA. However, bears resumed the previous downtrend when the price eventually broke below the 149.00 support level.

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Therefore, the pause at the 147.00 level might only be brief to allow bears to rest and the SMA to catch up. Given the strong bearish bias, the price might soon break below 147.00 to retest the 145.00 support level. The downtrend will continue as long as the price keeps making lower highs and lows.

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• The USD/JPY outlook indicates increased demand for the safe-haven yen.

• Market participants dumped risky assets in the panic that followed Trump’s new tariffs.

• The US will release its crucial nonfarm payroll report.

The USD/JPY outlook indicates increased demand for the safe-haven yen amid escalating fears of the impact of Trump’s tariffs on the global economy. Meanwhile, market participants are looking forward to the nonfarm payrolls report for clues on Fed policy. 

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The yen strengthened as market participants dumped risky assets in the panic that followed Trump’s new tariffs. The US president implemented tariffs on Canada, Mexico, and China. Furthermore, he promised a reciprocal tariff starting in April that will affect more countries. These policy changes ignited trade wars that have dimmed the outlook for the global economy. The US economy is also under threat since many companies depend on imports and exports. A decline in trade will, therefore, leave them in the dark. 

Furthermore, the yen remained strong due to the recent rise in BoJ rate hike expectations. Higher inflation in Japan has convinced speculators that the Bank of Japan will implement more rate hikes. Therefore, traders are bullish on the yen. 

Meanwhile, the US will release its crucial nonfarm payroll report, showing the state of employment. Soft data will raise Fed rate cut bets, further hurting the greenback. On the other hand, a rebound in employment would allow the dollar to recover. 

USD/JPY Forecast:

• US average hourly earnings m/m
• US nonfarm employment change
• US unemployment rate
• Fed Chair Powell Speaks

USD/JPY technical outlook: Downtrend nears the 147.00 key level

On the technical side, the USD/JPY price is nearing the 147.00 support level, a new low in the downtrend. The price trades far below the 30-SMA, showing bears are in the lead. At the same time, the RSI trades below 50, indicating solid bearish momentum. 

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USD/JPY has maintained its downtrend, making lower highs and lows. However, bulls have also tried several times to take control by breaking above the 30-SMA. Still, the price has reached fresh lows. If this momentum continues, bears will break below the 147.00 key level to make new lows. 

However, before the break, the price might pause or pull back to retest the 30-SMA. The bearish bias will remain strong as long as the price stays below the 30-SMA with the RSI under 50. 

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• The USD/JPY price analysis shows a retreating yen.

• Core consumer prices in Tokyo increased by 2.2%, missing forecasts.

• Trump confirmed tariffs on Canada and Mexico would take effect in March.

The USD/JPY price analysis shows a retreating yen after data revealed softer-than-expected inflation in Japan. Meanwhile, the dollar was on the front foot after Trump confirmed the implementation of tariffs on Canada and Mexico.

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Data on Friday showed cooler inflation in Japan in January. Core consumer prices in Tokyo increased by 2.2%, missing forecasts of 2.3%. At the same time, this dropped from the previous month when it increased by 2.5%. As a result, the yen paused its recent Trump-driven rally. Nevertheless, inflation remains above the Bank of Japan’s target. Therefore, it will motivate policymakers to implement more rate hikes. 

BoJ rate hike expectations and safe-haven demand have propelled the yen in February. Market participants are more optimistic about Japan’s economy, which has supported rate hike bets. Meanwhile, uncertainty about Trump’s policy plans has pushed investors to buy the safe-haven yen. 

However, on Thursday, Trump confirmed tariffs on Canada and Mexico would take effect in March. As a result, the dollar rebounded against most of its peers. However, it barely gained against the yen, which also got support from safe-haven inflows. 

Market participants are now looking forward to inflation figures from the US, which will shape the outlook for Fed rate cuts. 

USD/JPY key events today

• US core PCE price index m/m

USD/JPY technical price analysis: Bullish RSI divergence leads to SMA break

On the technical side, the USD/JPY price has broken above the 30-SMA to indicate a bullish shift in sentiment. However, the price has not made a strong enough move to indicate a trend reversal. Meanwhile, the RSI has broken above 50, indicating stronger bullish momentum. 

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The previous downtrend showed weakness when it paused near the 149.00 support level. The bears stopped making strong swings below the SMA. At the same time, the price made more wicks, showing rejection below the 149.00 level.

Additionally, the RSI showed a bullish divergence, the clearest indication of fading momentum. This allowed bulls to break above the 30-SMA. However, bulls must now break above the 151.00 resistance to start making higher highs and lows. This would confirm a new bullish trend.

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• The USD/JPY outlook suggests a scramble for safety in the yen.

• The US president announced a likely 25% tariff on automobiles.

• The FOMC meeting minutes revealed inflation worries due to Trump’s trade policies.

The USD/JPY outlook suggests a scramble for safety in the yen as market participants worry about Trump’s tariffs. At the same time, stalled talks between Russia and Ukraine have lowered the likelihood of a near-term end to the war. 

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The yen soared to new highs on Thursday as traders scrambled for safe assets amid economic and geopolitical uncertainty. The global economy is under threat as Trump marches on with new tariffs. On Tuesday, the US president announced a likely 25% tariff on automobiles that will affect most major economies, especially the Eurozone. These new tariffs follow duties on steel, aluminum, and Chinese goods. At the same time, markets expect a 25% tariff on Mexico and Canada in March. 

The tariffs might ignite a global trade war that would negatively impact the global economy. Consequently, risk appetite will continue dropping, supporting safer currencies like the yen and the US dollar. 

Elsewhere, the FOMC meeting minutes revealed that policymakers were worried Trump’s tariffs would lead to a spike in inflation. Therefore, there is a high chance the Fed will keep interest rates elevated. 

At the same time, tensions between Russia and Ukraine have increased since Trump’s recent involvement. Ukraine is now accusing Russia and the US of secret deals that have caused a pause in planned talks. Continued geopolitical tensions will increase demand for the traditionally safe yen. 

USD/JPY key events today

USD/JPY technical outlook: Price in freefall towards 149.50

On the technical side, the USD/JPY price has collapsed further and broken below the 151.02 support level. This move has pushed the price far below the 30-SMA, indicating a strong bearish lead. At the same time, the RSI has dipped into the oversold region, indicating solid bearish momentum. 

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Bears took charge when the price met its resistance trendline. The reversal was sharp, pushing the price below the 30-SMA. Moreover, bears confirmed a continuation of the downtrend when the price broke below 151.01 to make a lower low. 

Given the strong bearish bias, USD/JPY might soon reach the 149.50 level. However, since the RSI is in the oversold region, the price might soon pause before continuing lower.

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• The USD/JPY forecast shows rising bets for another Bank of Japan rate hike.

• Japan’s GDP increased by 2.8% in the fourth quarter of 2024.

• Recent BoJ policymaker remarks have shown a more hawkish tone.

The USD/JPY forecast shows rising bets for another Bank of Japan rate hike in July after Japan released an upbeat GDP report. As a result, Japanese bond yields have rallied to new highs, boosting the yen.

Data on Monday revealed that Japan’s GDP increased by 2.8% in the fourth quarter of 2024. This figure was much higher than the forecast of 1.0%, showing stronger-than-expected economic expansion. Moreover, this report followed several others showing stronger consumption, wage growth, and inflation in the country. Consequently, the stage is set for more Bank of Japan rate hikes. 

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Japan’s central bank hiked rates in January and left the door open for more hikes. Market participants were pricing at least one more hike in the fourth quarter. However, recent policymaker remarks have shown a more hawkish tone and a willingness to hike rates further. Additionally, data has pushed analysts to forecast another rate hike as early as April. Meanwhile, markets are pricing an 80% chance of a hike in July.

Meanwhile, the dollar eased at the start of a quiet week, with few major reports from the US. Market participants will focus on Trump’s speech on Tuesday, which might give more clues on tariffs. The delay in reciprocal tariffs weighed on the greenback last week. 

USD/JPY key events today

Market participants are not expecting key reports from Japan or the US. 

USD/JPY technical forecast: Bears attacking 151.02 support

On the technical side, the USD/JPY price has collapsed after failing to break above its resistance trendline. It currently trades below the 30-SMA with the RSI near the oversold region, suggesting a bearish bias. However, bears are approaching a solid hurdle at the 151.02 support level that might pause the decline. 

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USD/JPY has maintained a downtrend, making lower highs and lows with a clear resistance trendline. However, the trend has been shallow, with the price chopping through the 30-SMA. If this trend continues, the price will soon break below the 151.02 support level to make a lower low. 

On the other hand, the price might pause at 151.02 and reverse to retest the resistance trendline. A break above the trendline would confirm a bullish reversal.

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• The USD/JPY forecast suggests a brief pause after a rally in the previous session.

• The US reported that inflation increased by 0.5% in January.

• Market participants are keeping an eye on Trump’s tariff developments.

The USD/JPY forecast suggests a brief retreat as traders take profits after an upbeat US inflation report. However, the bullish bias remains intact as market participants price a hawkish Fed and only one rate cut this year. High borrowing costs will keep a wide gap in rates between the US and Japan, hurting the yen.

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The dollar rallied to new peaks against the yen after an upbeat consumer inflation report, reversing the previous downtrend. The US reported that inflation increased by 0.5% in January, well above estimates of a 0.3% increase. At the same time, the annual figure jumped by 3.0%, beating forecasts of 2.9%. The unexpectedly hot numbers pushed market participants to slash bets for Fed rate cuts. After the report, traders were only pricing 28-bps of rate cuts this year, down from 37-bps.

Meanwhile, market participants are keeping an eye on Trump’s tariff developments. The US President has promised to impose duties on all countries that have tariffs on US goods. Such an outcome would rekindle fears of a global trade war and economic uncertainty. Moreover, tariffs will likely keep US inflation high, forcing the Fed to keep rates at elevated levels. 

USD/JPY key events today

• US core PPI m/m
• US PPI m/m
• US unemployment claims

USD/JPY technical forecast: Bulls pause to retest 154.01 as support

On the technical side, the USD/JPY price has broken above the 30-SMA and soared past the 154.01 resistance level. At the same time, the RI has jumped and now trades near the overbought region. This shows a strong shift in sentiment from bearish to bullish. 

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Previously, the price had shown massive bearish momentum when it collapsed through the 154.01 support and reached the 151.02 level. However, bears could not continue beyond this level. As a result, bulls emerged and made an engulfing candle that signaled a looming reversal. Soon after, the price broke above the SMA, rising to new highs. 

At the moment, the price is retesting the 154.01 level as support. If it holds firm, the price will likely climb to the 156.00 resistance level. However, it might drop further to the 30-SMA before making new highs.

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• BoJ’s Naoki Tamura said on Thursday that the central bank should raise rates to 1%.

• The dollar remained fragile after a pause in some of Trump’s tariffs.

• Traders are looking forward to the US nonfarm payrolls report.

The USD/JPY outlook indicates a surge in expectations for another BoJ rate hike this year after hawkish policymaker remarks. Meanwhile, the dollar traded near an eight-week low against the yen after Trump’s tariffs failed to take off in Canada and Mexico, easing fears of global trade wars.

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Hawkish BoJ policymaker Naoki Tamura said on Thursday that the central bank should raise rates to 1% by the end of 2025. After these remarks, market participants were pricing a 98% chance of another rate hike by September. As a result, the yen rallied. 

The BoJ maintained a cautious tone towards the end of 2024. However, since Trump’s inauguration, policymakers have gained motivation to keep rates high. The new administration’s policy changes might strengthen the dollar, putting pressure on the yen. Moreover, recent data from Japan has revealed stronger wage growth and high inflation, giving the BoJ enough room to hike rates. 

On the other hand, the dollar remained fragile after a pause in some of Trump’s tariffs on Tuesday. Initially, the US currency gained from the prospect of tariffs on Canada, Mexico, and China. However, Canada and Mexico managed to negotiate with the US, leading to a pause. Since then, market participants have viewed these tariffs as negotiating tactics, pushing the dollar lower. Meanwhile, traders are looking forward to the US nonfarm payrolls report for more clues on future Fed moves.

USD/JPY key events today

USD/JPY technical outlook: 152.00 support halts sharp decline

On the technical side, the USD/JPY price has paused its decline near the 152.00 support level. The bearish bias is strong because the price trades well below the 30-SMA, and the RSI is nearer the oversold region. 

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Previously, the downtrend was showing weaker momentum between the 154.01 support and the 156.51 resistance levels. As a result, the price kept puncturing the 30-SMA resistance. However, a surge in bearish momentum allowed USD/JPY to break below the 154.01 support level, leading to a strong swing below the 30-SMA. 

The pause at the 152.00 level will allow bulls to return and retest the 154.01 as resistance or the 30-SMA. Nevertheless, given the strong bearish bias, the downtrend will likely continue with a new low below 152.00.

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• Data revealed solid wage growth in Japan in December.

• Market participants are pricing 30-bps of BoJ rate hikes by the end of this year.

• The yen strengthened due to safe-haven demand amid fears of a trade war between the US and China.

The USD/JPY price analysis shows a strong yen with rising expectations for Bank of Japan rate hikes this year amid upbeat data. Meanwhile, the greenback remained fragile after Trump paused tariffs on Canadian and Mexican goods in the previous session.

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The yen strengthened against the dollar on Wednesday as data revealed solid wage growth in Japan in December. Notably, real wages rose by 0.6% annually, boosting BoJ rate hike bets. Market participants are now pricing 30-bps of rate hikes by the end of this year. Moreover, Japan’s central bank might be motivated to hike interest rates if Trump’s tariffs significantly strengthen the dollar.

Meanwhile, the yen also strengthened due to safe-haven demand amid fears of a trade war between the US and China. Trump’s 10% tariff on Chinese goods took effect on Tuesday. Meanwhile, China responded immediately by imposing tariffs on some US goods. Moreover, the two top leaders do not seem ready to negotiate better trading deals. Therefore, market participants are worried about a prolonged trade war. 

The dollar eased on Wednesday against most of its peers amid relief over the pause in tariffs on Canada and Mexico. However, this might be brief if Trump decides to impose more tariffs. 

USD/JPY key events today

• US ADP non-farm employment change
• US ISM services PMI

USD/JPY technical price analysis: Bears eye 152.00 after breakout

On the technical side, the USD/JPY price has broken below the 154.01 support level. As a result, the price has made a lower low, confirming a continuation of the downtrend. The price has fallen well below the 30-SMA, with the RSI nearer the oversold level, supporting a bearish bias. 

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USD/JPY has maintained a shallow downtrend since bears took charge. Although they are making swing lows, the price is sticking close to the 30-SMA. At the same time, the RSI has barely entered the oversold region, a sign that bears are holding back or bulls are quite strong. 

If bears gain momentum, the price will collapse to the 152.00 support level. On the other hand, if bulls overpower bears, the price might break above the 30-SMA to start an uptrend.  

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• Trump emphasized his plans to impose tariffs on Canada and Mexico.

• The US economy grew by 2.3%, compared to estimates of 2.7%.

• The yen is set to end the week with an over 1.5% gain.

The USD/JPY price analysis indicates an increasing likelihood of a 25% US tariff on goods from Mexico and Canada, supporting the dollar. Meanwhile, the yen eased at the end of a strong week as BoJ remarks weighed.

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The dollar rebounded Thursday as US President Donald Trump emphasized his plans to impose tariffs on Canada and Mexico. Market participants have remained cautious, anticipating the proposed Trump tariffs. If they come on February 1 as promised, it will open the door for more tariffs, boosting the US currency. These tariffs will discourage trade between these countries and likely cause tensions. However, production and demand for US goods will increase, boosting the economy.

Meanwhile, traders also focused on US data, which showed a smaller-than-expected economic expansion. According to the report, the economy grew by 2.3%, compared to estimates of 2.7%. However, the report also revealed a significant increase in consumer spending. 

Meanwhile, the Bank of Japan chief said on Friday that the central bank must keep rates low to allow underlying inflation to increase. His remarks led to a retreat in the yen. However, Japan’s currency is set to end the week with an over 1.5% gain. The yen has soared since the BoJ increased borrowing costs last Friday.

USD/JPY key events today

• Core PCE Price Index m/m
• Employment Cost Index q/q

USD/JPY technical price analysis: Bulls challenge the 30-SMA resistance

On the technical side, the USD/JPY price has rebounded after failing to break below the 154.01 support level. However, the price still trades below the 30-SMA, showing bears are in the lead. Additionally, the RSI favors bearish momentum below 50. 

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Currently, the price is retesting the 30-SMA resistance. If it holds firm, USD/JPY will return to the 154.01 support. A break below this level will confirm a continuation of the downtrend. On the other hand, if bullish momentum surges past the 30-SMA, the price will likely retest the 156.51 resistance level. Moreover, the break would signal a shift in sentiment to bullish. 

Meanwhile, to confirm a new bullish trend, the price would have to break past the 156.51 resistance and start making higher highs and lows.

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• The yen rallied as investors scrambled for safety after news of a new free Chinese AI.

• Trump announced plans to impose tariffs on specific goods.

• Market participants eagerly awaited the FOMC policy meeting.

The USD/JPY price analysis shows the dollar regaining its footing against the yen as market participants look forward to the FOMC meeting. At the same time, Trump’s remarks on tariffs in the previous session revived the greenback.

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On Monday, the yen rallied as investors scrambled for safety after news of a free Chinese AI model shook markets. Risks appetite plunged after reports revealed that DeepSeek, a Chinese company, was introducing an AI model that uses less data and lower-cost chips. 

The AI industry in the US has supported a strong rally in equities in recent years. Therefore, the threat of low cost AI in China significantly hurts the risk appetite. However, this was bullish for the yen, considered a traditional safe-haven.

Nevertheless, there was some support for the dollar when Trump announced plans to impose tariffs on steel, imported computer chips, and pharmaceuticals. As a result, demand for locally produced goods will increase, boosting the economy. 

At the same time, market participants eagerly awaited the FOMC policy meeting. Economists expect the Fed to maintain interest rates. Moreover, analysts believe policymakers might maintain a cautious tone. Trump’s policies and their impact on the economy remain uncertain. Therefore, the US Central Bank might prefer a gradual approach as the economy adjusts to the new administration. Such an outlook will likely boost the dollar.

USD/JPY key events today

• US CB consumer confidence

USD/JPY technical price analysis: Bullish RSI divergence 

On the technical side, the USD/JPY price has rebounded and paused at the 30-SMA resistance. Meanwhile, the RSI trades slightly above 50, showing bulls are gaining momentum. The previous downtrend started showing weakness when the price punctured the 30-SMA resistance. However, bulls were unable to break above the 156.51 resistance level. As a result, the price fell to a lower low near the 154.01 support level. 

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Although price action indicated a continuation of the downtrend, the RSI made a bullish divergence, showing fading momentum. Consequently, bulls resurfaced at the 154.01 support, pushing the price to the 30-SMA. 

Given the divergence, the price will likely breach the SMA resistance. However, bulls must also break above 156.51 to confirm a reversal. If this happens, USD/JPY will retest the 158.50 resistance level.

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• The dollar recovered on Wednesday after Trump’s tariff policy plans became clearer.

• Traders look forward to central bank meetings in the US and Japan.

• Traders are pricing a 96% chance of a BoJ rate hike on Friday.

The USD/JPY forecast shows a pause in the dollar’s recent climb as market participants await key central bank decisions. Traders paused ahead of Friday’s Bank of Japan meeting, where the central bank might hike rates by 25-bps.

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The dollar recovered on Wednesday after Trump’s tariff policy plans became clearer. Although not immediate, the US president plans to impose a 25% tariff on imports from Mexico and Canada. At the same time, the government has united at a 10% tariff on goods from China. All this might happen by next month. However, experts believe the government might reveal concrete tariff plans in April. 

Meanwhile, traders look forward to central bank meetings in the US and Japan. The Federal Reserve will meet next week, and economists expect a pause. Therefore, market participants will focus on the messaging for future policy moves. A hawkish outlook will boost the dollar. Meanwhile, a dovish one might lead to a pullback.

On the other hand, the Bank of Japan will meet on Friday, with traders pricing a 96% chance of a rate hike. Moreover, policymakers might signal more rate hikes to balance the impact of Trump’s policies on the global economy. At the same time, if the Fed remains hawkish, the dollar might pressure the yen lower. Therefore, the BoJ will have enough motivation to keep hiking rates.

USD/JPY key events today

• US unemployment claims
• President Trump speaks

USD/JPY technical forecast: Bulls take charge after RSI divergence

On the technical side, the USD/JPY price has broken above the 30-SMA resistance to indicate a bullish sentiment shift. This move came after the RSI made a bullish divergence, showing weak bearish momentum. 

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The previous downtrend paused at the 155.01 support level, where bulls emerged. Although bears made another attempt to break below this level, the price made a large wick, showing a strong rejection. This allowed bulls to breach the 30-SMA resistance. 

Currently, the price is eyeing the 157.01 resistance level. If it holds firm, USD/JPY will likely retest the 30-SMA as support before continuing higher. Meanwhile, if bulls are strong, they will break past the resistance to target the 158.74 key level.

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• Trump’s presidency might be bullish for the dollar.

• Trump’s tariffs will increase demand for locally produced goods.

• Traders expect the Bank of Japan to hike rates this week.

The USD/JPY forecast shows indecision ahead of Trump’s inauguration speech. At the same time, market participants are gearing up for the Bank of Japan policy meeting. However, trading might remain thin due to the Martin Luther King Jr. Day Holiday in the US. 

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USD/JPY fluctuated on Monday, with the greenback steady amid anticipation of Trump’s policies. Meanwhile, the yen was also steady as market participants priced a high likelihood of a Bank of Japan rate hike on Friday. 

Analysts have predicted that Trump’s presidency will be bullish for the dollar since his policy proposals might boost economic growth. Traders will wait to see whether he will implement his proposals to cut taxes and impose tariffs on imported goods. Tax cuts will favor the economy by improving the business environment. Meanwhile, tariffs will increase demand for locally produced goods. At the same time, experts believe this will lead to a spike in inflation that would force the Fed to keep interest rates at restrictive levels.

On the other hand, traders expect the Bank of Japan to hike rates this week to support a weak yen. At the same time, since Trump’s policies will likely support the dollar, a BoJ rate hike will keep the yen from dropping too much. 

USD/JPY key events today

Market participants do not expect any key reports from the US or Japan. Consequently, market participants will focus on Trump’s inauguration. 

USD/JPY technical forecast: Bulls pause at 30-SMA hurdle

 

On the technical side, the USD/JPY price has recovered after finding support at the 155.01 key level. However, the bullish move has paused after meeting the 30-SMA resistance line. Moreover, the bearish bias remains intact since the price trades below the 30-SMA, with the RSI below 50. 

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Therefore, bears might soon overpower bulls to revisit the 155.01 support level. A break below this support will confirm a continuation of the downtrend as it would form a lower low. Moreover, it would clear the path for USD/JPY to retest the 153.25 support level. 

On the other hand, a break above the SMA and the 157.01 resistance level would indicate a bullish shift in sentiment. However, the price would have to start making higher highs and lows to confirm a bullish trend.

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• Bank of Japan Governor Kazuo Ueda signaled a likely rate hike.

• The US PPI increased by 0.2%, well below estimates of a 0.4% increase. 

• Traders are focused on Wednesday’s Consumer Price Index report.

The USD/JPY price analysis shows rising bets for a Bank of Japan rate hike next week, supporting the yen across the board. Meanwhile, the dollar remained weak after data in the previous session revealed softer-than-expected wholesale inflation. At the same time, the greenback paused its rally amid caution ahead of the crucial consumer inflation report.

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On Wednesday, Bank of Japan Governor Kazuo Ueda said the central bank would hike rates if Japan’s economy continued improving. His remarks aligned with his deputy’s, reinforcing bets for a near-term rate hike. Market participants are currently pricing a 70% chance of such a move during next week’s meeting. 

Meanwhile, the greenback paused its rally after data on Tuesday revealed softer wholesale inflation in December. The PPI increased by 0.2%, well below estimates of a 0.4% increase. Meanwhile, core inflation did not change during the month. Economists had forecasted a 0.2% increase. 

The downbeat figures increased Fed rate cut expectations, hurting the dollar. However, traders are more focused on Wednesday’s Consumer Price Index report. Another downbeat report will increase rate cut bets. On the other hand, an unexpected jump in inflation would lead to a rally in Treasury yields and the dollar.

USD/JPY key events today

• US core CPI m/m
• US CPI m/m
• US CPI y/y

USD/JPY technical price analysis: Price action suggests looming sentiment shift

On the technical side, the USD/JPY price is bouncing lower after finding resistance at the 158.02 key level. It trades below the 30-SMA with the RSI in bearish territory, indicating a bearish bias. 

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Bulls are showing weaker momentum after many attempts to make a new high and detach from the SMA. The RSI has made a bearish divergence, and price action shows larger bearish candles. Meanwhile, bullish candles are getting smaller. This is a sign that bears might be ready to take charge.

The price has been trading in a shallow, bullish channel. Therefore, a break below the channel support would show a bearish shift in sentiment. Moreover, the price must break below the 156.03 support to start making lower highs and lows, confirming a downtrend. In this case, USD/JPY would revisit the 154.01 support level.

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