Japanese Yen Gains on Strong GDP Data, Puts Pressure on USD/JPY Near One-Week Low
The Japanese Yen (JPY) continues to hold strong gains after a strong Q4 GDP report supported expectations of more interest rate increases by the Bank of Japan (BoJ). Narrowing US-Japan rate difference, combined with persistent weakness of the US Dollar (USD) amid disappointing US retail sales and market skepticism around Trump’s offered reciprocal tariffs, holds the USD/JPY pair close to a one-week low. Owing to hawkishness offered by the Federal Reserve, offering some support for the USD notwithstanding, the functional bias remains skewed towards JPY bulls, making a further lower direction for the currency pair quite likely. Support levels are key around 151.40 and 150.00, with any bounce being met with resistance at 152.70 and higher. KEY LOOKOUTS • Solid Q4 GDP growth of 2.8% supports the view that the Bank of Japan will keep tightening monetary policy. • A soft US Retail Sales report and worries over Trump’s retaliatory tariffs keep the USD at a two-month low, bearing down on the USD/JPY pair. • The diminishing gap between US and Japanese interest rates strengthens the Yen, increasing investor confidence in Japan’s currency amid BoJ’s hawkish stance. • USD/JPY faces immediate support near 151.40, with further downside potential toward 150.00, while resistance lies at 152.70 and 154.00. The Japanese Yen continues to strengthen as robust Q4 GDP data reinforces expectations of further interest rate hikes by the Bank of Japan (BoJ). The decline in the US-Japan rate differential and continued US Dollar softness, fueled by soft US Retail Sales data and reservations regarding Trump’s proposed tit-for-tat tariffs, maintain the USD/JPY cross close to a one-week low. Although the Federal Reserve’s hard-dollar bias lends some support to the USD, overall sentiment remains in favor of JPY bulls. Critical support for the duo comes around the 151.40 and 150.00 points, whereas any bounce could see stiff resistance near 152.70 and 154.00. The Japanese Yen is still strong following positive Q4 GDP numbers, further solidifying BoJ rate hike expectations and putting pressure on USD/JPY around a one-week low. Poor US Retail Sales and Trump’s reciprocal tariffs worries also bear down further on the USD, as key support and resistance levels at 151.40 and 152.70, respectively. • Japan’s Q4 GDP increased by 2.8%, further solidifying hopes for additional Bank of Japan (BoJ) rate hikes. • The Japanese Yen holds its ground, driving the USD/JPY pair down as the US Dollar weakens. • A steep 0.9% decline in US retail sales puts further pressure on the USD, dampening investor sentiment. • Uncertainty in the markets regarding Trump’s tariffs plans on US imports is adding to USD weakness and JPY strength. • A narrowing gap between US and Japanese interest rates is further adding to the bullish momentum of the Yen. • USD/JPY is supported close to 151.40 and 150.00, but resistance is found at 152.70 and 154.00. • The USD gets some support from the Fed’s determination to hold rates higher, capping USD/JPY losses deeper than this. The Japanese Yen keeps gaining strength with Japan’s 2.8% Q4 GDP growth increasing hopes of higher rate hikes from the Bank of Japan (BoJ). The constricting US-Japan rate gap, coupled with soft US economic indicators, has held the USD/JPY pair close to a one-week low. The US Dollar is still under the gun after the sudden 0.9% fall in US retail sales to signal weakening consumer expenditures. Moreover, uncertainty surrounding former President Donald Trump’s so-called reciprocal tariffs has contributed to market uncertainty, which has dampened the USD further. Investors currently expect a stronger Yen in the short term, with major support levels at 151.40 and 150.00. USD/JPY Daily Price Chart TradingView Prepared by ELLYANA Even though the USD is weak, the Federal Reserve’s aggressive stance on interest rates serves as a counterbalance, stopping further losses in the USD/JPY pair. The Fed’s hesitation to reduce rates in the near future gives some relief to the USD, but its upside is still limited by prevailing sentiment. The USD/JPY technical levels are being watched closely by traders, with resistance at 152.70 and 154.00, which would see a short-covering rally if broken. Still, with the BoJ tightening measures and a closing rate gap, the bullish momentum in the Yen is set to continue, placing pressure on the currency pair during the next few sessions. TECHNICAL ANALYSIS USD/JPY currency pair is trading close to significant support levels at 151.40, with further downside risk towards the psychological 150.00 level. Daily chart oscillators are still in bearish territory, and the decreasing US-Japan rate gap continues to support the Yen. A slide below 150.90 could further enhance selling pressure, driving the pair towards the 149.60-149.55 range and possibly testing the 149.00 support. On the higher side, any bounce might find stiff resistance at 152.70, which coincides with the 200-day Simple Moving Average (SMA). A breakout above 153.15 (100-day SMA) may result in a short-covering rally, pushing the pair to 154.00 and the 154.75-154.80 supply area. But since fundamentals favor the Yen, the overall trend will remain bearish unless USD bulls take charge again. FORECAST USD/JPY pair can recover if some conditions are met. A breach above the 152.00 level may propel the pair towards the robust resistance level of 152.70, where the 200-day Simple Moving Average (SMA) is located. A firm breakout above this level might lead to a short-covering rally, driving the pair towards the 153.15 region (100-day SMA). If bullish pressure intensifies, the subsequent target is around the 154.00 psychological level, then the 154.45-154.50 supply zone. Another push higher might have the pair retracing last week’s high in the vicinity of the 154.75-154.80 area, if the US Dollar regains power on the back of aggressive Federal Reserve policy or improved risk appetite for global markets. USD/JPY remains below 152.00, with near-term support around 151.40-151.45. A break below here might trigger selling pressure faster, taking the pair down to 150.90, which is the lowest level since December 10. Further falls might test the psychological 150.00, with longer losses making the descent towards the support
