USD/JPY Forecast: Tariffs and Weaker Dollar Boost Yen
The USD/JPY forecast indicates a rise in demand for the Japanese Yen due to uncertainties surrounding US trade policies and a weakening US dollar.
Key Takeaways:
- The yen rallied last week amid global economic uncertainty.
- US economy added fewer jobs than expected in February (151,000).
- Concerns persist regarding the impact of tariffs on the global economy.
Market participants are worried about the effects of potential tariffs initiated by the US, especially after initial tariffs on Canada, China, and Mexico caused market jitters. Although tariffs on Canada and Mexico were temporarily suspended, the underlying concerns about trade wars remain.
Recent labor market data from the US also contributed to the Yen's strength. February saw the addition of only 151,000 new jobs, falling short of the anticipated 159,000. Additionally, the unemployment rate edged up to 4.1%, exceeding the projected 4.0%. These figures have fueled speculation about potential Federal Reserve rate cuts, with investors now anticipating up to three cuts in 2025. This dovish outlook has put downward pressure on Treasury yields and the dollar.
Upcoming Events:
No major economic reports are expected from the US or Japan today, suggesting a period of consolidation for the USD/JPY pair.
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On the technical front, the USD/JPY pair is hovering near the 147.00 support level. The price is currently below the 30-SMA, and the RSI remains below 50, indicating a bearish sentiment.
The price action suggests a potential break below the 147.00 level, which could lead to a retest of the 145.00 support. The downtrend is expected to persist as long as the price continues to form lower highs and lows.
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Saqib Iqbal is a market analyst, prop fund trader, and mentor with extensive experience in financial markets. He is known for his day trading reviews and multi-timeframe analysis.