USD/JPY declines for the third consecutive day as safe-haven demand rises

By RoboForex Analytical Department 

The USD/JPY pair fell to 143.58, marking its third consecutive day of losses. The Japanese yen continues to gain ground as demand for safe-haven assets rises amid escalating global trade tensions.

Trade risks boost yen demand

Demand for safe-haven currencies surged after US President Donald Trump threatened to double tariffs on steel and aluminium imports to 50% from 4 June. This announcement weighed on Japanese steelmakers, with JFE Holdings and Kobe Steel potentially facing headwinds. Nippon Steel may fare better, thanks to Trump’s favourable comments regarding its planned merger with US Steel.

Meanwhile, tensions between the US and China escalated further as Beijing rejected Trump’s accusations of breaching the recently negotiated trade agreement in Geneva.

Domestic data supports the yen

Japan’s latest data revealed stronger-than-expected capital expenditure growth in Q1. Investment activity increased across both the manufacturing and non-manufacturing sectors, reinforcing domestic fundamentals amid global headwinds.

With uncertainty lingering and market preference shifting towards defensive assets, the yen continues to show resilience and may remain firm if current conditions persist.

Technical analysis of USD/JPY

On the H4 chart, USD/JPY formed a narrow consolidation range around 144.22, which the market broke below earlier today. This breakout opens the way for a continued move down towards 142.20. After reaching this level, a corrective rebound to 144.22 is possible. The MACD indicator confirms this scenario, with its signal line below zero and pointing steeply downwards, indicating strong bearish momentum.

On the H1 chart, the pair is forming the fifth wave of the current downtrend, targeting 142.20. A temporary rebound to 143.88 is expected today, followed by a continuation of the decline to 142.70, with the potential for further movement down to 142.20. The Stochastic oscillator supports this outlook, with its signal line rising above 20 towards 50, suggesting a brief corrective move before further downside.

Conclusion

The USD/JPY pair remains under pressure due to heightened trade-related risk and growing demand for safe-haven assets such as the Japanese yen. Technically, the pair is poised for further decline, with 142.20 as the next key target. While a short-lived rebound may occur, broader sentiment continues to favour yen strength as long as global trade concerns persist.

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.