The USD/JPY currency pair remains in a consolidative phase around the 152.00 mark due to conflicting factors that are currently influencing market sentiment. On the one hand, US President Donald Trump’s new tariffs on steel and aluminum imports have reignited global trade war fears, thereby boosting the safe-haven appeal of the Japanese Yen. On the flip side, expectations of a delay by the Federal Reserve in terms of rate cuts amidst inflationary pressures are buoying the US Dollar. On the other hand, increasing speculations that the Bank of Japan (BoJ) will raise interest rates further are bolstering the Yen but are offset by concerns of instability in Japan’s economy due to Donald Trump’s policies. From a technical standpoint, the pair faces resistance at 152.50, with a downside bias suggesting potential declines toward the 151.00-150.90 zone if selling pressure intensifies. However, a breakout above 152.50 could pave the way for further gains toward 153.00 and beyond. Traders now await Fed Chair Jerome Powell’s testimony and US inflation data for clearer direction.

KEY LOOKOUTS

• The new 25% tariffs on steel and aluminum imports will likely disrupt global trade, enhancing the safe-haven appeal of JPY and raising concerns about the stability of Japan’s economy.

• As inflation remains above the 2% target, growing expectations of further interest rate hikes by the Bank of Japan may strengthen the Yen.

• The Federal Reserve’s decision on rate cuts, which is largely dependent on Powell’s testimony and US inflation figures, will be crucial in determining the next move of USD/JPY.

The USD/JPY pair is at a critical juncture as multiple factors shape its trajectory. Recent US tariffs under Donald Trump have only added fuel to concerns of a global trade war, making the Japanese Yen a safe haven currency while sowing uncertainty over the stability of Japan’s economy. Meanwhile, speculations about additional interest rate hikes from the Bank of Japan continue to be positive for the Yen as inflation remains higher than the 2 percent target of the central bank. Meanwhile, any signals from Fed Chairman Jerome Powell or upcoming data that could either accelerate or restrain monetary policy should propel the course in the USD currency. It looks like resistance and support of key levels appear below at around 152.50. Thus a sustained pull from the inside bar zone may turn out towards significant further deterioration at 151.00 – 150.90. Of late, markets continue to keep themselves busy focusing keenly over future economic events of the economic states.

USD/JPY still trades in the range, though, with fresh tariffs by Trump fueling fear of a full-blown trade war that strengthens the Yen. Uncertainty in Fed rate cut also helps support the USD. BoJ’s potential rate hike further impacts the sentiment. 152.50 resistance and 151.00-150.90 support form the pair’s next direction of movement. Further direction would now be sought on Powell’s testimony and US inflation data.

• The imposition of 25% tariffs on steel and aluminum imports by President Trump increases global trade tensions, enhancing the safe-haven appeal of the Japanese Yen.

• Inflation above the 2% target would further encourage the Bank of Japan to increase interest rates, supporting the JPY.

• Market attention is focused on Fed Chair Jerome Powell’s testimony and US inflation data, which will help decide the central bank’s next monetary policy move.

• The US Dollar is buoyed by growing hopes that the Fed will postpone the rate cuts, as economic and labor market conditions are surprisingly robust.

• USD/JPY has hit a significant resistance zone at 152.50 where the 100- and 200-day SMAs are located.

• If the pair falls below this crucial support zone, it will create further selling momentum to the psychological 150.00 mark.

• Traders remain vigilant in the days ahead as geopolitics, inflation figures, and the decisions of the central banks influence the USD/JPY direction.

USD/JPY is still trading in a consolidation mode due to the uncertainty surrounding the global economy and the decisions of the central banks. Recent 25% tariffs announced by US President Donald Trump on imports of steel and aluminum have resurfaced fears of a trade war, making the safe haven Japanese Yen an attractive bet for traders. However, the possibility of retaliatory measures and disruption in trade agreements against Japan’s economy has kept further JPY gains at bay. Meanwhile, expectations of more rate hikes by the BoJ continue to be supportive of the Yen, with policymakers indicating that the increase might reach 1% by the second half of the fiscal year.

USD/JPY Daily Chart

TradingView Prepared by ELLYANA

It will be hard for the BoJ to avoid hiking the rate further, given that inflation in Japan is consistently above the central bank’s 2% target. On the other hand, the US Dollar remains strong as market players anticipate the Federal Reserve may delay lowering interest rates due to concerns of sustained inflation. Investors will be on the lookout for the congressional testimony by Fed Chair Jerome Powell and US consumer inflation figures released shortly, which would shed light on the central bank’s intentions.

TECHNICAL ANALYSIS

USD/JPY pair is consolidating near the 152.00 level, facing strong resistance at 152.50, where the 100-day and 200-day Simple Moving Averages (SMAs) converge. A decisive break above this key level could trigger a short-covering rally, pushing the pair towards the 153.00 psychological mark, with the next resistance around 153.75. On the downside, immediate support is seen at the 151.30 level, followed by the 151.00-150.90 zone, which has acted as a strong base in recent sessions. A sustained move below this range could accelerate the bearish momentum, exposing the pair to further declines toward the 150.55 intermediate support and the crucial 150.00 psychological level. Besides that, oscillators on the daily chart are in negative territory but have not entered the oversold zone, and thus selling pressure might continue unless a strong bullish catalyst appears.

FORECAST

The USD/JPY currency pair might be on the path for a bullish breakout if it succeeds in sustaining its move above the key resistance at 152.50 where the 100-day and 200-day SMAs converge. A successful breach of this level may trigger a short-covering rally, driving the pair toward the 153.00 psychological mark. Further upside momentum could push it to the 153.75 resistance, a key level that has previously capped gains. A more extended rally might be possible if the US Dollar strengthens on the back of higher inflation data or a hawkish stance from Fed Chair Jerome Powell. Besides, any apparent wavering by the Bank of Japan on raising interest rates will further drive the Yen down, and that would support USD/JPY at its higher levels.

Conversely, in case the pair fails to break above 152.50, selling is likely to mount, and this would push the pair below to the immediate support at 151.30 levels. Further falls would test the previously strong support zone at 151.00-150.90 levels, which acted as a significant support zone over the last couple of sessions. A break below that level will simply add weight to the bearish bias and thrust USD/JPY to its intermediate support area of 150.55; the 150.00 psychological mark remains its next major support level. Some dovish noises from the Fed, soft data in the United States, and better-than-expected control in inflation measures at the BOJ could fast track the bear’s run. Traders also need to look out for geopolitical news, where renewed trade tensions or unexpected policy changes could throw in more volatility into the pair.