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Currencies USD/JPY

Japanese Yen Weighed Down by Stronger US Dollar and Risk Averse Markets as US NFP Report Looms

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  • June 6, 2025
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Japanese Yen continues to be under pressure for the second day in a row with dismal domestic data coupled with increasing hopes over US-China trade negotiations detracting from the safe-haven currency. Meanwhile, the US Dollar stays supported ahead of the crucial Nonfarm Payrolls (NFP) report, though gains remain limited due to growing expectations of a Fed rate cut later this year. In spite of the prevailing bearishness surrounding the Yen, the disparity between the monetary policies of the Bank of Japan and the Federal Reserve, as well as ongoing geopolitical concerns, could assist in limiting further declines in the JPY and limiting substantial upside to the USD/JPY pair. KEY LOOKOUTS • Market players are keenly observing the release of future US Nonfarm Payrolls figures, which might have a considerable impact on USD/JPY direction based on the strength of the labor market and implications for Federal Reserve policy. • Speculation that the Bank of Japan might continue to hike rates as the Federal Reserve ponders cutting in 2025 might cap USD upside and underpin JPY resiliency on the medium term. • The USD/JPY currency pair is probing important resistance at the 144.00 level, and a breakout above it—especially above 144.40—can be seen as a sign of fresh bullish momentum. • Declining Japanese household spending and wages increase recession possibilities, which can weaken consumer activity and negatively impact JPY sentiment unless met with accommodative policy actions. Japanese Yen continues to decline against the US Dollar as a mix of weak Japanese economic data and upbeat sentiment regarding US-China trade relations suppresses demand for the safe-haven currency. The USD/JPY pair is still underpinned, though momentum is subdued ahead of the US Nonfarm Payrolls (NFP) release, which may tilt expectations for future Fed policy actions. As the Yen is under downward pressure, losses for it could be capped by the Bank of Japan’s growing hawkish attitude and ongoing geopolitical risks that might revive demand for safe-haven assets. The Japanese Yen is under pressure in weak domestic data and stronger US Dollar in the run-up to the NFP report. Nevertheless, BoJ’s hawkish bias and global tensions might limit additional JPY losses. Traders remain cautious around crucial technical levels. • The Japanese Yen is still on the backfoot for the second consecutive day on account of disappointing domestic spending and wage figures. • The US Dollar receives support from repositioning in anticipation of the pivotal US Nonfarm Payrolls (NFP) report. • Divergent policy expectations—BoJ tilting hawkish, Fed anticipating rate cuts in 2025—may cap any further USD/JPY gains. • Hopes regarding resumed US-China trade talks diminish the safe-haven demand for the Yen. • The 144.00 and 144.40 levels are pivotal resistance levels for USD/JPY, with bullish strength depending on a breakout. • A fall below 142.75 may open up the pair to further losses towards the support area of 141.60. • US fiscal worries and global tensions can prevent the JPY from falling sharply, acting as a safeguard for the currency. The Japanese Yen is currently under pressure downwards as recent economic figures from Japan indicate slowing consumer expenditure and falling real wages. These trends are of concern to Japan’s economic prospects, particularly as private consumption contributes a major percentage of the nation’s GDP. Concurrently, increased hopes about the return of US-China trade negotiations have reduced the appeal of the Yen as a safe-haven currency, and investors have turned towards riskier assets. In the meantime, the US Dollar is still relatively firm as traders look towards the release of the US Nonfarm Payrolls (NFP) soon, which will be an important gauge of the US labor market’s health and can have an impact on subsequent Federal Reserve policy making. USD/JPY DAILY PRICE CHART CHART SOURCE: TradingView Despite the current pressure on the Yen, expectations that the Bank of Japan will maintain a tighter monetary policy contrast with the Federal Reserve’s potential rate cuts next year, creating a policy divergence that could limit further depreciation of the Yen. Additionally, ongoing geopolitical risks and concerns about global economic stability continue to support demand for safer assets, including the Yen. Japan-US trade talks are also advancing, as Japan has put on the negotiating table a more flexible US auto tariff approach that could further impact currency trends. Overall, while the Yen is strained in the short run, there are many factors that could stabilize the currency in the future. TECHNICAL ANALYSIS USD/JPY pair has been consolidating within a specific range, establishing a pattern since the beginning of the week. Strong resistance is seen at the 144.00 and 144.40 levels, the latter of which closely corresponds to the 100-period Simple Moving Average (SMA) on the 4-hour chart. A clean break above those levels might reflect a change in favor of bullish traders, who might send the pair to the psychological 145.00 level. On the negative side, support levels near 143.50, 143.00, and below near 142.70 and 141.60 will be pivotal in deciding whether bearish pressure continues. Oscillator indices indicate mild bearish inclination at the moment, meaning that any rallies will encounter selling interest at resistance levels. FORECAST The short-term USD/JPY outlook indicates cautious upside potential if the pair is able to convincingly break and hold above the important resistance of 144.40. A move up could be bullish, prompting traders to drive the pair towards the next psychological hurdle at 145.00. The scenario would be supported by firm US economic numbers or increased risk appetite, maybe fueling additional USD strength versus the Yen. In contrast, if USD/JPY is unable to break resistance and instead drops below support levels around 143.50 and 143.00, the pair may encounter fresh selling pressure. An extended drop below 142.70 may intensify the downtrend, exposing lower support areas around 142.10 and 141.60. This bearish scenario would be driven by poorer US data, rising risk aversion, or rising bets for a more dovish Federal Reserve, which would favor the lower-yielding Yen.

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Currencies EUR/USD

EUR/USD Loses Ground in the Run-Up to Eurozone Inflation Data as US Dollar Experiences Technical Correction

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  • June 3, 2025
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EUR/USD is losing ground as the US Dollar recovers on technical basis even as the US manufacturing data remains soft. Market players remain focused on the release of forthcoming Eurozone HICP inflation data, which may set the direction for ECB policy. In the meantime, trade tensions have flared again after Donald Trump suggested doubling steel and aluminium tariffs, which elicited a sharp retort from the European Union. With increasingly worrying fears about global trade and economic deceleration, investors stay on guard ahead of major US labor market releases, which may further influence currency action. KEY LOOKOUTS • The markets are looking forward to the publication of the Harmonized Index of Consumer Prices (HICP) that will provide a glimpse into the European Central Bank (ECB) policy direction. • US Dollar recovers on technical correction, even as a softer ISM Manufacturing PMI reading hints at possible stagflation pressures in the US economy. • Trump’s suggestion that tariffs on steel and aluminium be doubled in size stokes concerns about intensifying trade tensions, prompting denials from the European Union and putting at risk current negotiations. • Investors look to the next US JOLTS report for new labour market indications that will affect USD strength and inform near-term EUR/USD action. EUR/USD is lower around 1.1420 in the Asian session on Tuesday, as the US Dollar experiences a technical correction in spite of continued fears of economic slowdown. The pair fell after its robust performance in the last session, having appreciated more than 0.50%. Traders now await the forthcoming Eurozone Harmonized Index of Consumer Prices (HICP) inflation to see how it affects European Central Bank policy expectations. On the other hand, US manufacturing activity continues to shrink as the ISM Manufacturing PMI fell to 48.5 in May, a third month of falling, adding to the market angst. Adding to market nerves, President Donald Trump’s plan to double steel and aluminium tariffs has heightened trade tensions concerns as the European Union threatened possible countermeasures that could threaten bilateral talks. EUR/USD drifts lower around 1.1420 on technical bounce for US Dollar, down on poor US manufacturing data. Market sentiment takes a hit with rising trade tensions following Trump’s tariff increase. •  EUR/USD declines around 1.1420 after recording more than 0.50% on the last session, pummeled by a rebounding US Dollar. •  US Dollar bounces on technical correction even as weaker-than-anticipated ISM Manufacturing PMI data drops to 48.5 in May. •  European Central Bank’s next interest rate move could be influenced by eurozone HICP inflation data. •  Trade tensions escalate as Donald Trump lays out a plan to double US tariffs on steel and aluminium imports, putting pressure on global markets. •   European Union reacts forcefully, threatening Trump’s tariff increase can derail current trade talks and trigger retaliatory measures. •  US economic worries continue, as stagflationary signs rise as manufacturing production falls for a third consecutive month. •   Traders await US JOLTS Job Openings report later today for additional information on labor market strength and possible USD effect. The foreign exchange market is paying close attention to events in the Eurozone and the United States as significant economic and political events unfold. Traders are looking to the publication of the Eurozone’s Harmonized Index of Consumer Prices (HICP), an important inflation reading that could have implications for European Central Bank policy later on. Meanwhile, the overall market mood is being influenced by the revived trade tensions following former US President Donald Trump’s decision to double import tariffs on steel and aluminum, which was met with strong criticism from the European Union. The EU has threatened that such a move could dash hopes of pending trade negotiations and prompt retaliatory actions, which casts a cloud of uncertainty over the global economic outlook. EUR/USD DAILY PRICE CHART CHART SOURCE: TradingView At the same time, recent US data keeps highlighting issues in manufacturing. The most recent ISM Manufacturing PMI report showed a third month of slowing down, which indicates stress on the industrial part of the economy. In spite of that, the US Dollar has still been able to recover some lost ground as a result of market positioning and technical considerations. In the near future, focus will be on the US JOLTS Job Openings report, which can offer additional insight into the health of the US labor market and inform expectations for future economic trends. TECHNICAL ANALYSIS EUR/USD is immediately met with resistance around the 1.1450 level, an area that corresponds with recent session highs and could limit further upside if bullish pressure diminishes. To the downside, initial support is at 1.1380, where buyers previously intervened, then even firmer support at the 1.1350 handle, which aligns with the 50-day moving average. Momentum indicators such as the Relative Strength Index (RSI) are in the neutral range, predicting a possible consolidation phase unless a clear breakthrough or breakdown happens. Traders will be looking for a sustained breakout above resistance or below strong support to establish the next direction of travel. FORECAST The Euro initially responded well, with EUR/USD increasing more than 0.50% during the last session as investor sentiment improved temporarily. Support from positive momentum came courtesy of expectations regarding the soon-to-be-released Eurozone HICP inflation data that can provide some indication of the European Central Bank’s next policy decision. Moreover, worries of decelerating US economic numbers, such as softer manufacturing data, helped to encourage a more bearish sentiment regarding the US Dollar. These sentiments assisted the Euro to rally during the initial trading session, aided by optimism and positioning within markets. The advances, however, were temporary as the US Dollar recovered owing to a technical reversal, pushing EUR/USD down around the 1.1420 level. The Dollar’s rebound occurred notwithstanding the continued uncertainty over economic softness, such as a third straight monthly drop in US factory output. To add to the bear pressure on the Euro, news of former US President Donald Trump’s plan to raise tariffs on steel and aluminium again fueled trade war fears. Further hammering the sentiment was the European Union’s threat

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Currencies

USD/CAD Strengthens Towards 1.3900 on Decreasing US-China Tensions and Dipping Oil Prices

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  • April 28, 2025
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USD/CAD currency pair is on the rise, reaching the 1.3900 level as decreasing US-China trade tensions increase demand for the US Dollar while declining crude oil prices drag on the Canadian Dollar. Hopes for better relations between the two economic giants have been fueled by China’s move to exempt some US goods from high tariffs, even as there have been conflicting official reports. Meanwhile, oil prices are falling further as a result of US-Iran nuclear talks making progress and rumors that OPEC+ will further raise output, putting the commodity-correlated CAD under pressure. With the Federal Reserve in blackout mode prior to its next policy decision, market attention continues to be on the geo-political events and energy market fundamentals. KEY LOOKOUTS • Any fresh remarks or actions pertaining to the tariff discussions could have implications for sentiment and USD strength. •  Oil weakness, particularly from US-Iran news or OPEC+ actions, could continue to keep the Canadian Dollar under selling pressure. •  The May 7 FOMC meeting will be closely monitored by markets for interest rate and economy direction signals. Canadian employment or inflation reports coming up could give the CAD guidance in the face of external pressures. USD/CAD are influenced by continuous progress in US-China trade relations, particularly any confirmation or rejection of tariff talks, which would influence investor sentiments and USD demand. Crude oil prices continue to be a key determinant of the Canadian Dollar, with risks to the downside emanating from expected OPEC+ production hikes and Iranian oil returning to world markets. In addition, investors are waiting for the forthcoming Federal Reserve policy meeting on May 7 to look for clues on interest rate direction, with Canadian economic reports like employment and inflation figures contributing to the near-term direction of the pair as well. Traders will be closely observing US-China trade headlines and crude oil price movements, both the main drivers for USD/CAD. Focus also shifts to the Fed meeting and Canadian economic releases for further guidance. • USD/CAD approaches 1.3900, posting gains for the second straight session. • Reducing US-China tensions boost the US Dollar after China temporarily exempts some US goods from tariffs. • Mixed signals emerge as Chinese officials refute reports of ongoing tariff talks. • DXY firm, trading close to 99.70, providing support to USD/CAD. • Fed is in blackout period before the May 7 FOMC meeting. •Declining oil prices weigh on the Canadian Dollar with US-Iran nuclear developments and OPEC+ output expectations. • Market attention turns to geopolitical developments, Fed policy cues, and future Canadian economic data. The USD/CAD currency pair continues to appreciate as market sentiment remains bullish on the US Dollar due to de-escalating tensions between the US and China. Optimism for better trade relations was rekindled following China’s move to exempt specific US imports from its high tariffs, which was seen as an indication of the possibility of thawing their months-long trade confrontation. Despite declarations by Chinese authorities that no talks are in process, the initial step has proved sufficient to give a boost to optimism regarding the prospects of world trade, helping the USD along the way. USD/CAD Daily Price Chart Source: TradingView At the same time, the Canadian Dollar is under pressure due to falling oil prices, which are closely tied to Canada’s economy. Crude prices have declined amid progress in US-Iran nuclear talks, raising the possibility of Iranian oil returning to global markets. Speculation that OPEC+ may increase oil output again has also added to the downward pressure. With the Federal Reserve in a period of silence before its policy meeting and uncertainty still surrounding trade and energy markets, USD/CAD is still sensitive to global news and commodity direction. TECHNICAL ANALYSIS USD/CAD is displaying bullish strength as it tests the important resistance level around 1.3900, boosted by two days of consecutive gains. The currency is trading above its short-term moving averages, reflecting strong purchasing interest, while momentum oscillators such as the RSI are still in neutral-to-bullish levels, reflecting scope for further appreciation before hitting overbought levels. A clean breakout above 1.3900 will potentially initiate a move towards the 1.3950–1.4000 range, while initial support is at 1.3800, which will possibly serve as a floor in the event of a correction. FORECAST If sentiment surrounding US-China relations remains strong and the US Dollar strengthens, USD/CAD can experience additional upside in the near future. Sustained trading above the 1.3900 level could draw additional bullish energy, with the pair moving towards 1.3950 or even 1.4000. Ongoing weakness in crude oil prices, especially if Iranian supply re-enters the market or OPEC+ increases production, will also continue to weigh on the Canadian Dollar, helping to propel the pair higher. But there are still downside risks if diplomatic optimism is lost or official comments persist in contradicting previous optimistic headlines and suppressing risk appetite and US Dollar bearishness. And any subsequent rebound in oil prices—on the back of supply disruptions or more robust global demand—may provide support to the Canadian Dollar and drag USD/CAD back down. Breaking through the support level of 1.3800 may initiate a more severe correction to 1.3740 or lower, particularly if future Canadian data surprises higher.

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