USD/JPY Price Forecast: Struggles on weak US data, tariff woes
- Momentum remains bearish, with key support at 149.00 and 148.57.
- JPY strengthens as safe-haven demand rises amid US trade tensions.
- A rebound above 150.00 could open the door for 151.14 and 152.38.
The USD/JPY begins Tuesday’s Asian session unchanged after registering losses of 0.74% on Monday. Soft US data and tariffs on Mexico, Canada, and China beginning on March 4 keep the Greenback on the backfoot against most G7 currencies. The pair trades at 149.59, up 0.06%.
USD/JPY Price Forecast: Technical outlook
After posting solid gains in the last week, the USD/JPY began the current one negatively as Japanese Yen (JPY) buyers entered the market at a better price. This followed an eight-day rally that witnessed an appreciation of 3.87% for the JPY, which drove the pair from 154.55 to 148.57.
Momentum remains tilted to the downside, as depicted by the Relative Strength Index (RSI). With that said, the USD/JPY's first support would be 149.00. Once surpassed, the next stop would be the February 25 low of 148.57, followed by the September 30 swing low of 141.64.
On the other hand, if USD/JPY recovers and climbs past 150.00, look for a retest of the Senkou Span A at 151.14 before challenging the Kijun-sen at 152.38.
USD/JPY Price Chart – Daily
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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