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Currencies USD/JPY

Japanese Yen Set for Further Upside as BoJ Rate Hike Bets Build and US-Japan Rate Differentials Narrow

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  • March 6, 2025
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The Japanese Yen (JPY) reversed its intraday declines against a faltering US Dollar (USD) and is trading close to a multi-month high, fueled by increasing bets for further interest rate increases by the Bank of Japan (BoJ). Rising JGB yields and the decreasing rate differential between the US and Japan remain supportive of the JPY. Nevertheless, fears of US tariffs on Japan, rising US Treasury yields, and positive risk sentiment in the market could cap further appreciation of the safe-haven currency. While the technical indicators hint at a bearish consolidation in the USD/JPY currency pair, traders are keeping their eyes on the US Nonfarm Payrolls (NFP) report due to be released, which may provide more guidance. A fall below the 148.00 mark is still feasible, while the 150.00 level can act as resistance to any expected bounce. KEY LOOKOUTS • The market expects further interest rate hikes by the Bank of Japan to support the JPY and tighten the US-Japan yield differential. • Future Nonfarm Payrolls (NFP) and other jobs numbers will impact USD sentiment and could guide the next significant move for USD/JPY. • Fears of additional tariffs by the US against Japanese imports could bring uncertainty and affect risk sentiment, which can influence JPY’s safe-haven demand. • USD/JPY is marked at important support around 148.00, with a breakdown lower to intensify downside potential, while resistance around 150.00 might limit rebounds. Japanese Yen (JPY) is still in the spotlight as investors watch for major economic and geopolitical drivers underpinning its direction versus the US Dollar (USD). Hopes for additional rate increases by the Bank of Japan (BoJ) still underpin the JPY, reducing the US-Japan yield gap and making the currency stronger. In the meantime, the highly anticipated US Nonfarm Payrolls (NFP) report is set to be a key driver, dictating USD sentiment and determining the next direction for the USD/JPY currency pair. Furthermore, fear of possible US tariffs on Japanese imports introduces a degree of uncertainty, which may affect risk appetite and propel demand for safe-haven currencies such as the JPY. Technically, the 148.00 support is still key, with a breach through it possibly fueling further losses, while the 150.00 psychological resistance could limit any near-term bounces. The Japanese Yen (JPY) continues to appreciate against the US Dollar (USD) on the back of BoJ rate hike expectations and a declining US-Japan yield gap. But future US Nonfarm Payrolls (NFP) figures and fears of possible US tariffs on Japan could sway market sentiment. The major technical levels of 148.00 support and 150.00 resistance will decide the next big move in USD/JPY. • Increasing speculation of additional Bank of Japan (BoJ) rate increases underpins the JPY and reduces the US-Japan interest rate spread. • The JPY is at a multi-month high against the USD, erasing intraday losses as part of the broader USD weakness. • The coming US Nonfarm Payrolls (NFP) release and other jobs data will be pivotal in guiding the direction of the USD/JPY pair. • Concerns that the US is going to impose additional tariffs on Japan introduce uncertainty and could influence market sentiment. • Higher Japanese government bond (JGB) yields and declining US Treasury yields make JPY stronger against the USD. • As much as JPY gains on safe-haven demand, rising US bond yields and positive risk tone could keep further gains in check. • USD/JPY has significant support at 148.00, while resistance around 150.00 can cap potential rallies, setting the stage for the next big move. The Japanese Yen (JPY) continues to benefit from increasing hopes that the Bank of Japan (BoJ) will continue to hike interest rates. The change in monetary policy is a testiment to Japan’s changing economic terrain, where economic stability and inflationary pressures have become central concerns. The increase in Japanese government bond (JGB) yields also indicates a shift away from the nation’s historically ultra-loose monetary policy. Consequently, investors are becoming more confident in the JPY as a solid alternative during times of global economic uncertainty. Moreover, Japan’s economic resilience and government policies to maintain growth continue to support market sentiment towards the Yen. USD/JPY Daily Price Chart Chart Source: TradingView Meanwhile, geopolitical and trade-related issues continue to be significant determinants of market conditions. The recent talks about the possibility of US tariffs on imports from Japan have generated wary mood, given that trade policy can have a broader impact on economic relations between the two countries. Market participants are keeping a close eye on events, as a change in trade relationships may affect Japan’s export-oriented economy. In the meantime, the global financial market is keenly watching major economic indicators, especially in the US, where employment figures and fiscal policies might have an impact on wider currency movements. During these events, the JPY continues to be a key factor in the forex market, a reflection of Japan’s economic prowess and policy changes. TECHNICAL ANALYSIS USD/JPY pair has been consolidating in a familiar range after a sharp drop from its yearly high around 159.00. The present price action implies a bearish consolidation phase, with momentum indicators on the daily chart remaining in negative ground but not yet triggering oversold readings. This suggests that the downtrend is likely to persist, with major support at the 148.00 level, which, if broken, could speed further losses toward the 147.35 zone. On the positive side, the 149.50-150.00 area represents instant resistance, and any movement above this can possibly lead to a short-covering rally. But overall market sentiment and technical factors will then dominate the move in the next big move in the pair. FORECAST If sentiment is changed in the direction of the US Dollar (USD), then the USD/JPY can make a northward movement if there are any positive surprises on US economic numbers, like Nonfarm Payrolls (NFP), in the near future. A good jobs report would underpin the anticipation that the Federal Reserve will remain prudent in the rate-cut stance, favoring the USD. Moreover, if the world risk appetite gets better and equity markets continue

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Currencies USD/JPY

BoJ Rate Hike Bets and US Tariff Uncertainty Struggle Japanese Yen for Clear Direction

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  • March 3, 2025
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The Japanese Yen (JPY) is underpinned by expectations of additional interest rate hike from the Bank of Japan (BoJ), but fights to achieve clear momentum versus the US Dollar (USD) because of tariff policy uncertainty in the US. While strong Japanese economic data and elevated government bond yields bolster the JPY, concerns over potential trade restrictions under former US President Donald Trump limit its upside. Meanwhile, the USD/JPY pair faces resistance at the 151.00 level, with investors awaiting key US macroeconomic data, including the ISM Manufacturing PMI and Nonfarm Payrolls, for further direction. Technically, the pair is still susceptible to a bear move unless it succeeds in breaking higher than 151.00, which may inspire a short-covering rally. KEY LOOKOUTS • Investors are expecting additional interest rate increases from the Bank of Japan, helping the Yen under steady economic conditions and ongoing inflation pressures. • Market sentiment is dampened by concerns regarding Donald Trump’s planned tariffs on Canada, Mexico, and China, limiting the gains of the Yen despite solid fundamentals. • ISM Manufacturing PMI and Nonfarm Payrolls releases are eyed by traders, which may determine Federal Reserve policy expectations and USD/JPY price action. • USD/JPY fails to overcome the 151.00 resistance; a breakdown will prompt a sell-off towards the 150.00 psychological mark. The Japanese Yen is still in the limelight as market participants balance BoJ rate hike hopes against uncertainties over US tariff policies. While strong economic growth and chronic inflation in Japan favor the Yen, fears of possible trade barriers under Donald Trump’s presidency cap its upside. At the same time, investors keep a close eye on important US economic indicators, such as the ISM Manufacturing PMI and Nonfarm Payrolls, which may affect Federal Reserve policy and move USD/JPY. On the technical side, the pair has solid resistance at 151.00, and if it fails to move above this point, it may lead to a drop to the 150.00 level. The Japanese Yen fights for direction as BoJ rate hike expectations boost it, with US tariff fears limiting gains. Investors look to crucial US economic indicators, with USD/JPY finding significant resistance at 151.00. Failure to rise above this point may see the pair decline towards 150.00. • Ongoing inflation and robust economic figures fuel rumors of additional interest rate increases by the Bank of Japan, which supports the Yen. • Donald Trump’s planned tariffs against Canada, Mexico, and China introduce uncertainty, capping the Yen’s upside despite positive domestic fundamentals. • The pair finds it difficult to break above 151.00, a key technical resistance for continued rally. • Market participants are paying close attention to the ISM Manufacturing PMI and Nonfarm Payrolls readings for insight into Federal Reserve policy intentions. • Market players are also hesitant, not making significant bets until US economic data send better signals about interest rate expectations. • Falling short of breaking above 151.00 levels may take USD/JPY down, and the main levels of support here are 150.00 and 149.75. • Persistent geopolitical and economic uncertainties, such as possible US-Japan trade wars, contribute to market volatility and Yen movement. The Japanese Yen is still in the spotlight as investors expect possible interest rate increases by the Bank of Japan (BoJ). Recent Japanese economic data show steady growth and ongoing inflation, supporting the view that the BoJ will further tighten its monetary policy. Increased interest rates usually make the Yen stronger, as they draw foreign investment into Japanese assets. But global trade tensions, especially with the US, cast a cloud of uncertainty on the market. There are indications that the White House might persuade Japan to make currency movements addressable, with the value of the Yen linked to the BoJ’s actions. This gives another twist to Japan’s economic situation. USD/JPY Daily Price Chart Chart Source: TradingView In the meantime, larger global considerations shape sentiment regarding the Japanese Yen. Investors are watching US economic policy closely, particularly former President Donald Trump’s intentions to impose additional tariffs on Canada, Mexico, and China. These trade barriers may affect global supply chains and economic growth, which would have an indirect effect on Japan’s export-based economy. Further, future US economic data releases such as the ISM Manufacturing PMI and Nonfarm Payrolls will give more insight into the Federal Reserve’s policy direction. Consequently, market players are on guard, waiting for further events to unfold before taking major investment decisions involving the Yen. TECHNICAL ANALYSIS USD/JPY is strongly resisted at the 151.00 level, which had served as the crucial support level. In the event of failure by the pair to breach this level, it would risk triggering a downward movement towards the psychological support point of 150.00. Another fall below 149.80-149.75 could reflect rising bearish momentum, sending the pair to 149.00 and ultimately to the multi-month low around 148.60-148.55. Alternatively, a strong break above 151.00 could induce a short-covering rally, with the next areas of resistance at 151.70-151.75 and the 152.00 level. A breach above 152.40, where the 200-day Simple Moving Average (SMA) currently rests, would mean a possible reversal of the trend and boost bullish sentiment. FORECAST If USD/JPY is able to break above the resistance level of 151.00, then it could initiate a short-covering rally, propelling the pair to the next resistance area of 151.70-151.75. Another prolonged movement beyond this range might bring the 152.00 psychological level into focus. If the bullish momentum persists, the pair may aim for the 152.40 level, where the 200-day Simple Moving Average (SMA) is located. A clear break above this level could indicate a trend change, further enhancing the prospects of additional gains in the near term. On the bearish side, inability to stay above 151.00 may trigger fresh selling pressure, with the initial major support at the 150.00 psychological level. A fall below this level could set the stage for a further slide towards the 149.80-149.75 area. If bearish pressure strengthens, USD/JPY could decline towards 149.00, and a break below this level could spur losses towards the multi-month low near 148.60-148.55. These levels will be key to deciding if the pair

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Currencies USD/JPY

Cautious Yen Rally: BoJ Hike Bets and Falling Back JGB Yields Keep USD/JPY Below 150

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  • February 24, 2025
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The US Dollar has stayed below 150 versus the Japanese Yen, at its lowest against the currency since October, because of increasing expectation that the Bank of Japan will keep raising rates as inflation endures. But backpedaling on JGB yields caps the yen’s gains, as BoJ Governor Kazuo Ueda signals willingness to boost bond purchases if long-term yields increase too steeply. Even with USD-selling momentum, the dollar continues to be under pressure, weighed down by poor US economic data and persistent inflation worries. Japanese Yen bulls are going slow as falling JGB yields and chances of moreforceful BoJ rate hikes keep the currency’s regain in check, keeping the USD/JPY pair under the key 150 level. KEY LOOKOUTS • Track BoJ actions on bond purchases and policy changes since they can shift market sentiment fast and impact USD/JPY levels through major thresholds. • Monitor JGB yield movements keenly, as falling yields may top the yen’s rise, capping potential USD/JPY rebound and impacting overall market dynamics. • Monitor US economic data releases, such as retail and PMI numbers, because worsening indicators may lead to rapid changes in investor sentiment. • Monitor key technical levels on USD/JPY, as breaks of support or resistance areas may facilitate directional moves and quickly shift market positioning. Investors will need to keep a close eye on Bank of Japan policy moves, as surprise bond-buying interventions or rate hikes could quickly change USD/JPY dynamics. Trends in Japanese Government Bond yields need to be closely watched because steadily falling yields could hamper yen advances and cap pair recovery. It is also important to watch U.S. economic data, including retail sales and PMI numbers, closely because deteriorating data can quickly turn market sentiment. Lastly, monitoring important technical levels on the USD/JPY pair is essential since breaks through set support or resistance areas may force sudden directional movements. Bank of Japan policy and Japanese government bond yields since any surprise movements may rapidly change USD/JPY dynamics. Closely monitor U.S. economic indicators and important technical levels for early indications of shifts in market sentiment. • Yen bulls are still guarded even at a two-month peak, as a result of worries about falling Japanese government bond (JGB) yields. • BoJ Governor Kazuo Ueda indicated potential for more bond purchases if yields surge, foreshadowing additional rate hike expectations. • Recent figures reporting Japan’s core inflation at a 19-month peak support projections of more forceful monetary policy tightening. • The USD/JPY pair remains below the pivotal 150 level, with technical resistance anticipated close to this psychological level. • Weaker-than-expected US economic data, such as a disappointing Walmart sales estimate and weakening PMI, have added to renewed USD selling. • Follow-through buying might push the pair upward towards resistance levels, while any weakness in support might set off a more abrupt fall. • There is support on the immediate side around the levels of 148.85-149.00, with downside targets possible at the 147.00 levels if these are broken. Investors in Japanese Yen are being cautious in light of changing market conditions, with expectations of continued policy tightening from the Bank of Japan being muted by efforts to stabilize government bond yields. The central bank has indicated that it is prepared to step in should bond yields climb too steeply, a gesture that highlights its determination to preserve financial stability while coping with the challenges presented by increasing inflation. Recent evidence of a persistent increase in core inflation has further cemented market hopes for more assertive action, even as such policy signals work to contain speculative action in the currency. USD/JPY Daily Price Chart Chart Source: TradingView Concurrently, United States economic indicators such as softer retail sales projections and deceleration in general business activity have added to balanced sentiment in international markets. Investors are still keeping an eye on the overall economic environment, where cautious optimism is slowly giving way to a more cautious approach. With policymakers watching these closely, the changing economic story on both sides of the Pacific is to influence monetary strategies in the future without causing sudden changes in market activity. TECHNICAL ANALYSIS USD/JPY currency pair is currently struggling with major levels that may determine its immediate direction. The close proximity resistance around the 150.00 level acts as a psychological wall, and a prolonged break above this level could set the stage for the pair to aim for higher resistance around the 150.70-150.75 level and higher towards the 150.90-151.00 horizontal support. On the other hand, the region between 148.85 to 148.65 has proven to be a crucial support area, where a breakdown could pave the way for additional losses down to the 147.00-147.45 area. This technical configuration indicates that investors would be keenly watching these levels in order to assess the vigor of potential reversal or continuation moves on the pair’s path. FORECAST If sentiment improves, the USD/JPY pair may witness a gradual upward trajectory. A continued surge through the 150.00 psychological level can create a rally and enable the pair to probe resistance at around the 150.70-150.75 area and then advance towards the 150.90-151.00 zone. Such possible upmove would be underpinned by follow-through purchases and a positive reinterpretation of the policy position of the BoJ, which, if seen as an indicator of faith in Japan’s economic prospects, would fuel fresh investor sentiment. On the negative side, if the immediate support levels around 148.85-148.65 do not hold, the pair can see a sharper fall. A break in this region may trigger a quick change in sentiment, driving the pair lower towards the next support level in the 147.00-147.45 region. In such a case, ongoing vigilance among participants and fresh pressure from USD selling may intensify the fall, placing greater emphasis on these support levels in mitigating the downside risk.

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Currencies USD/JPY

USD/JPY Outlook: Japanese Yen Falls Amid BoJ Rate Hike Expectations, Trump’s Tariff Concerns

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  • February 10, 2025
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The Japanese Yen is weakening further amid concerns that former US President Donald Trump might impose further trade tariffs against Japan, weighing on the latter’s economy. Though a marginal U.S. Dollar strength in the USD/JPY exchange rate supports this pair, another round of rising expectations for yet another rate hike by the BoJ limits losses in the Japanese Yen. Investors are closely watching Japan’s bond yields, inflation trends, and global market volatility, as the BoJ’s tightening stance contrasts with the Federal Reserve’s cautious approach. Additionally, technical indicators suggest that USD/JPY remains vulnerable below the key resistance zone of 152.50-152.45, making further downside movement a possibility. KEY LOOKOUTS • Investors anticipate another Bank of Japan interest rate hike, driven by rising inflation and real wage growth, supporting the Japanese Yen. • Renewed fears of U.S. trade tariffs on steel and aluminum imports may pressure Japan’s economy, potentially impacting the Yen’s strength. • A strong U.S. Dollar, supported by upbeat job data and Federal Reserve’s cautious stance, influences the USD/JPY pair’s price movement. • The USD/JPY pair faces strong resistance at this confluence zone, with a potential downside move if the pair fails to sustain above it. The Japanese Yen faces a complex trading environment as investors weigh the impact of potential U.S. trade tariffs, a strong U.S. Dollar, and expectations of further tightening by the Bank of Japan (BoJ). While hawkish BoJ sentiment and rising Japanese bond yields offer support to the Yen, concerns over Trump’s protectionist policies and their inflationary effects continue to pressure the currency. The Federal Reserve’s cautious stance, coupled with strong U.S. job data, further strengthens the Dollar, keeping the USD/JPY pair volatile. Meanwhile, technical indicators suggest that the pair remains vulnerable below the key resistance zone of 152.50-152.45, with potential downside risks if selling pressure intensifies. The Japanese Yen remains under pressure amid renewed U.S. trade tariff concerns and a strong U.S. Dollar, despite growing expectations of a BoJ rate hike. While rising Japanese bond yields offer some support, technical indicators suggest USD/JPY remains vulnerable below the 152.50-152.45 resistance zone, with potential downside risks. • Investors expect the Bank of Japan to raise interest rates again, supporting the Yen and narrowing the U.S.-Japan rate differential. • Renewed fears of U.S. trade tariffs on steel and aluminum imports add pressure on Japan’s economy and the Yen. • Strong U.S. job data and the Federal Reserve’s cautious stance provide a lift to the U.S. Dollar, impacting USD/JPY movement. • Higher Japanese Government Bond (JGB) yields support the Yen, limiting deeper losses despite global economic concerns. • USD/JPY faces strong resistance at this key confluence zone, making further gains uncertain. • The IMF points out spillover risks for BoJ rate hikes, which include increased costs of debt servicing and financial pressure on corporates. • The USD/JPY pair continues to trade in a volatile range due to uncertainty over U.S. trade policies, global inflation trends, and central bank decisions. The Japanese Yen remains on the back foot as renewed fears over potential U.S. trade tariffs and a strong U.S. Dollar take a toll on its performance. Former President Donald Trump’s proposal to impose additional tariffs on steel and aluminum imports raises fears of economic strain on Japan, adding to the Yen’s weakness. Meanwhile, the Federal Reserve’s cautious approach to interest rates, coupled with strong U.S. job data, continues to support the Dollar, keeping the USD/JPY pair elevated. Expectations of another rate hike by the Bank of Japan (BoJ) have also helped limit deeper losses for the Yen, as the widening JGB yields close the interest rate gap between the US and Japan. USD/JPY Daily Price Chart TradingView Prepared by ELLYANA The USD/JPY pair faces technical resistance around the 152.50-152.45 confluence zone, suggesting that further upside may be capped short of strong buying momentum. The International Monetary Fund (IMF) has also warned Japan to remain vigilant about potential financial risks stemming from BoJ’s tightening measures, including rising government debt costs and corporate financial stress. Additionally, Japan’s inflation-adjusted real wages have shown steady growth, reinforcing the case for further monetary tightening by the BoJ. With ongoing global market volatility and uncertainty around U.S. trade policies, the Yen’s movement remains highly sensitive to economic and geopolitical developments. TECHNICAL ANALYSIS USD/JPY pair remains vulnerable below the key resistance zone of 152.50-152.45, which includes the 100-day and 200-day Simple Moving Averages (SMAs). Indicators on the daily chart remain in negative territory, signaling a bearish bias, though not yet in the oversold zone. If the pair fails to sustain above this resistance level, fresh selling pressure could push prices lower towards the 151.25 support, followed by the critical 151.00-150.95 zone. A decisive break below this area could open the door for further declines towards the 150.50 psychological level and 149.60 horizontal support. However, a sustained move above 152.50 may trigger short-covering, allowing the pair to reclaim the 153.00 level, with further upside potential depending on market sentiment and fundamental catalysts. FORECAST The USD/JPY pair could see an upward movement if the U.S. Dollar remains strong, driven by positive economic data and the Federal Reserve’s cautious stance on rate cuts. A sustained break above the 152.50-152.45 resistance zone could trigger fresh buying interest, allowing the pair to reclaim the 153.00 psychological level. If bullish momentum persists, the next upside target would be 153.50, followed by the 154.00 mark. Further gains could be supported by renewed concerns over Japan’s economic outlook, particularly if the Bank of Japan takes a slower approach to monetary tightening. Any increase in global risk tone may also keep pushing investors toward the U.S. Dollar, as a haven, and subsequently lift USD/JPY more. On the downside, this pair has found some critical supports at 151.25 now, followed by the 151.00-150.95 zone. It can easily head down from that area, touching the next destination at 150.50; that is again a psychological target. If selling pressure intensifies, USD/JPY could extend its decline towards 149.60 and potentially test the December swing low near 148.65. Factors that

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Currencies USD/JPY

Japanese Yen Rises on BoJ Rate Hike Bets: Can USD/JPY Hold Above 153.00?

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  • February 5, 2025
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The Japanese Yen (JPY) remains bullish against the US Dollar (USD), having touched a one-month high due to increasing prospects of a rate hike by the Bank of Japan (BoJ). Strong growth in real wages and picking up the pace of inflation in Japan argue for more monetary tightening than possible rate cuts from the Federal Reserve due to slowing US job market data. Therefore, the divergence of policy outlook reduces the Japan-US rate differential, enhancing demand for the JPY. However, risk-on sentiment and the potential for US tariffs on Japan in its imports curtail further upside. Traders have now pivoted to the US ADP report and ISM Services PMI for intraday market guidance, and USD/JPY is due to challenge the 153.00 level and key technical supports. KEY LOOKOUTS • Stretched real wages and inflation in Japan strengthens prospects for additional BoJ rate increases, underpinning the Japanese Yen against the US Dollar. • A weakening US job market increases the likelihood of Fed rate cuts, which will further narrow the Japan-US rate gap and put pressure on the USD/JPY pair. • Investors are cautious as potential US trade tariffs on Japan may affect economic relations, adding uncertainty to JPY’s bullish momentum. • The USD/JPY pair is capped at 154.00, and a break below 153.00 may lead to further downside, testing the 100-day SMA near 152.45. The Japanese Yen managed to remain strong against the US Dollar even as expectations for a Bank of Japan rate hike continue, found being supported by rising real wages and inflation. However, weakening US job market data fuels speculation of Federal Reserve rate cuts and tightens the Japan-US rate differential, adding further downward pressure on USD/JPY. However, it remains capped by risk-on sentiment and concerns over potential US trade tariffs on Japan. At these levels, with the pair toying with 153.00, traders are being cautious, and now market participants are looking for key US economic data – first, the ADP report followed by ISM Services PMI, to give them further direction. The Japanese Yen is still gaining on the US Dollar due to BoJ rate hike expectations and the narrowing Japan-US rate differential. However, risk-on sentiment and potential US trade tariffs on Japan limit further gains. Traders now focus on key US economic data for short-term direction. • Rising real wages and inflation in Japan strengthen the case for further monetary tightening, boosting the Japanese Yen. • Poor US job data raises the prospect of cuts in Federal Reserve rates, narrowing the Japan-US rate differential and putting pressure on the USD. • The pair is trading at the 153.00 handle, and a break below could send it to the 100-day SMA around 152.45. • Market optimism about trade negotiations between the US, Canada, and Mexico limits the safe-haven appeal of the Yen. • Investors remain cautious as Japan is likely to be a part of US tariffs, which may affect the economic relationship and market sentiment. • Traders will look for the ADP employment report and ISM Services PMI for short-term guidance in the USD/JPY pair. • On the upside, immediate resistance lies at 154.00. Further upside would face resistance at 154.75 and 155.25. The level of 153.00 acts as a strong support. The Japanese Yen (JPY) maintains its bullish stance against the US Dollar (USD), driven by growing expectations of a Bank of Japan (BoJ) rate hike. Recent data showing a rise in Japan’s real wages and accelerating inflation reinforce the case for further monetary tightening, supporting the Yen’s appreciation. To date, weakening US job market data, including this week’s dismal JOLTS report, that fuels speculation the Federal Reserve would cut rates and that the two central banks pursue different policy stances, in a way cuts the Japan-US rate differential down, making JPY more interesting and weighing upon the USD/JPY which now hovers near the major 153.00 level. USD/JPY Daily Price Chart TradingView Prepared by ELLYANA Despite the JPY’s strength, risk-on sentiment and worries over potential US trade tariffs on Japan prevent a stronger rally. Investors are careful because US President Donald Trump’s tariff policies can eventually target Japan, given the latter’s significant trade surplus with the US. Moreover, the potential trade breakthrough between the US, Canada, and Mexico has eased trade war concerns, and this has further reduced safe-haven demand for the Yen. Traders now look to additional key US data such as ADP employment and ISM Services PMI for further market directions. Technical, a break below 153.00 level would push USD/JPY closer to the area of the 100-day Simple Moving Average (SMA) at 152.45, while resistance is still the 154.00 level, with higher areas of resistance quoted at the 154.75 and 155.25. TECHNICAL ANALYSIS The USD/JPY pair continues to trade under considerable bearish pressure, trading just above the key 153.00 level. A strong breakdown below this level will lead to additional downward momentum to the 100-day Simple Moving Average near 152.45, and enhance the bearish sentiment. Daily chart oscillators are turning south but still lack overbought readings, thus allowing for some additional losses. The nearest strength will be around the psychological barrier of 154.00. Beyond this lies a pair of obstacles at 154.75 and 155.25. A continuation move above these levels could invalidate the bearish scenario and shift short-term direction toward buyers, likely targeting the 155.50-156.00 zone. FORECAST Even though there is some short-term bearish momentum, there are some very important resistance zones that can initiate a short-term rebound if violated. The major resistance level can be found around the psychological area of 154.00. A sustained move above this level could fuel a short-covering rally, driving the pair towards the 154.75-155.00 region. Further bullish momentum could drive the pair to challenge the 155.25-155.30 resistance zone, a crucial pivot point that, if decisively broken, could shift the near-term trend in favor of buyers. Beyond this level, the next upside target would be the 156.00 region, provided market sentiment supports a stronger USD recovery. Expectations of further Bank of Japan (BoJ) tightening remain

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Currencies USD/JPY

Japanese Yen’s Tug of War: BoJ Rate Hike Bets vs. USD Strength Amid Geopolitical Uncertainty

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  • January 31, 2025
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The Japanese Yen is in a tug-of-war between bullish and bearish camps, as expectations of more rate hikes by the Bank of Japan (BoJ) clash with the strength of the US Dollar (USD). Latest statistics showing increasing inflation and strong industrial production in Japan will also give further justification to further monetary tightening, which makes the Yen resistant. However, geopolitical tensions are still in the limelight: rising tensions at the Sea of Japan and continued US trade policy uncertainties, making market sentiment very fragile. Low price action for the USD and anticipation of the US PCE Price Index report will cap further gains in the USD/JPY pair. While technical indicators suggest downside risks toward the 153.00 level, a breakout above the 155.00 mark could trigger a short-covering rally, potentially shifting the near-term bias in favor of the bulls. KEY LOOKOUTS • Rising Tokyo CPI and robust economic data fuel expectations of further BoJ tightening, supporting the Yen against excessive depreciation. • Russian military activity near Japan and uncertainties in US trade policies could raise safe-haven demand for the JPY, influencing its short-term movement. • Watch out for this preferred inflation gauge of the Fed, as it may dictate further strength in USD strength and next move in USD/JPY. • A break below 153.00 could confirm further downside, and sustained strength above 155.00 might encourage a bullish breakout in USD/JPY. The trajectory of the Japanese Yen continues to be shaped by a mix of domestic economic indicators, global geopolitical developments, and US monetary policy expectations. The strength in Tokyo CPI and robust industrial growth enhance the probability of further Bank of Japan (BoJ) rate hikes, which should continue to underpin the JPY. Geopolitical risks, however, such as Russian military activities near Japan and trade tensions between the US, add layers of uncertainty, potentially boosting safe-haven demand. All eyes are on the US PCE Price Index, which is an important indicator for Federal Reserve policy direction, and may influence USD strength and subsequently USD/JPY movements. From a technical perspective, a breakdown below 153.00 could trigger further losses for the pair, while sustained momentum above the 155.00 level may fuel a bullish rally. The Japanese Yen remains under pressure despite expectations of further BoJ rate hikes, supported by rising inflation and strong economic data. Geopolitical tensions and US trade policies add uncertainty, while the upcoming US PCE inflation data could influence USD/JPY movements. A break below 153.00 may signal further downside, while sustained gains above 155.00 could trigger a bullish rally. • Higher Tokyo CPI and robust industrial growth feed into speculation that the Bank of Japan may continue to tighten monetary policy, supporting the Yen. • Russian military move closer to Japan and US trade policies introduce uncertainty which could increase safe havens for JPY. • The Federal Reserve’s favorite inflation measure remains in focus for its effects on USD strength and the movement of USD/JPY. • The latest US GDP data showed a decline in growth, which may influence Fed policy and overall market sentiment. • A drop below 153.00 could signal further losses, while a sustained move above 155.00 may trigger a bullish breakout. • US President Donald Trump’s threats of higher tariffs on Mexico, Canada, and BRICS nations could impact global markets and JPY’s safe-haven appeal. • Higher Treasury yields, which are fueled by inflation fears, are supportive for the USD. Expectations for Fed policy are critical going forward for USD/JPY. The Japanese Yen remains trapped in a gossamer balance between BoJ rate hike expectations and greater global economic forces. Recent data show a rise in Tokyo’s CPI and strong industrial production, hinting that the central bank of Japan will be on its course toward policy normalization. This boosts the Yen from excessive depreciation. However, there are geopolitical risks, such as Russian military activities near Japan, and trade tensions between the US and other nations, which leave market sentiment unsure. US President Donald Trump’s warnings of a potential hike in tariffs on Mexico, Canada, and BRICS could trigger volatility in the markets. The latter is likely to raise safe haven demand for JPY. USD/JPY Daily Chart TradingView Prepared by ELLYANA However, attention now turns to US Personal Consumption Expenditure Price Index that can be taken as the preferred measure of inflation at the Fed’s end and influence the USD strength. A stronger-than-expected reading should reinforce the hawkish Fed narrative, sending USD/JPY higher, and a softer reading should cap upside for the Dollar. Another issue is that the US economy also slowed in Q4, thus economic momentum-related concerns should begin to factor in market expectations as well. On the technical side, levels to watch are support near 153.00, where a collapse could speed losses, and resistance at 155.00, where a sustained move above could trigger a bullish breakout. TECHNICAL ANALYSIS USD/JPY now stands at a critical juncture that depicts both key support and resistance in dictating its next move. A protracted break below 153.00 could accelerate selling, which in turn would likely send the currency pair lower again to the range of 152.40 to 152.00. From there, possible support is a 100-day Simple Moving Average (SMA). If on the other hand, USD/JPY breaks above the strong resistance of 154.50 and through 155.00 psychological, which is considered quite a big milestone, it is likely to unlock a bullish run. Further upside may drive the pair towards 155.40-155.45, with a further extension to 156.00 and the weekly high of 156.25. Oscillators on the daily chart are gaining negative traction but remain outside the oversold zone, which suggests room for further correction unless strong buying momentum emerges. FORECAST USD/JPY remains intact if the pair manages to sustain above the 154.50 level, with the next major hurdle being the 155.00 psychological mark. A decisive breakout above this level may trigger fresh impetus for bulls, to attain further gains towards 155.40-155.45. Further buying pressure may take the pair up to about 156.00 and even attack the 156.25 weekly high. Freshly built strength of the

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