By RoboForex Analytical Department
USD/JPY is consolidating near 151.96 after a temporary pause in the yen’s recent strength.
Key market factors
At the beginning of the week, the Japanese yen weakened against the US dollar as the greenback reacted to fresh US trade tariffs.
US President Donald Trump recently signed an executive order imposing a 25% tariff on steel and aluminium imports, with no exemptions for partner countries. This decision has triggered fears of a global trade war, which could, in turn, limit the Federal Reserve’s ability to cut interest rates further.
Despite this, the yen appreciated by 2% against the USD last week, driven by increasing market expectations that the Bank of Japan (BoJ) will continue its monetary tightening cycle.
Free Reports:
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Download Our Metatrader 4 Indicators – Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
BoJ policymaker Naoki Tamura reinforced this view last Thursday by suggesting that the central bank should move towards an interest rate of at least 1% in the second half of fiscal 2025. Recent Japanese economic data supports this hawkish stance, with rising wages and household spending providing a solid foundation for further rate hikes.
Technical analysis of USD/JPY
On the H4 chart, USD/JPY formed a consolidation range around 151.90 after a downward move. A break below this range is expected, targeting 148.80, with a potential continuation to 148.38. This level serves as a local target. Once the wave completes, a corrective move towards 151.90 is possible before the broader downtrend resumes, aiming for 145.50. The MACD indicator confirms this scenario, with its signal line below zero and sharply downwards, suggesting ongoing bearish momentum.
On the H1 chart, the market is developing a downward wave towards 148.40, with consolidation around 151.90. A downside breakout would confirm the continuation of the second phase of the decline. After reaching 148.40, a corrective move back to 151.90 could materialise. The Stochastic oscillator supports this outlook, with its signal line below 80 and sharply downward, indicating bearish pressure.
Conclusion
The Japanese yen’s rally has paused, but further gains remain likely, supported by expectations of continued BoJ tightening. Technical indicators suggest that USD/JPY may break lower towards 148.40, with further downside potential towards 145.50. The yen’s trajectory will depend on BoJ policy signals and further developments in US trade policy, particularly how global markets respond to Trump’s tariffs.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
- Trump lashed out at the US Federal Reserve chief Jerome Powell with criticism. Energy prices are falling Apr 22, 2025
- EUR/USD Hits Three-Year High as US White House Policy Concerns Mount Apr 21, 2025
- Today is Good Friday — most financial markets will be closed Apr 18, 2025
- EUR/USD in Equilibrium: Quiet Trading Expected on Good Friday Apr 18, 2025
- The Bank of Canada kept the interest rate unchanged. In New Zealand, there is an increase in inflation Apr 17, 2025
- Pound Among the Winners Boosted by US Dollar Weakness and Rate Cut Prospects Apr 17, 2025
- China data beat expectations. Inflationary pressures in Canada continue to ease Apr 16, 2025
- Japanese Yen Surges as Weak US Dollar Fuels Momentum Apr 16, 2025
- Investors welcome tariff reliefs. Demand for safe assets is decreasing Apr 15, 2025
- CN50 waits on key China data Apr 15, 2025
