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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’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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Currencies USD/JPY

Japanese Yen on Edge: BoJ Policy Speculation Balances Risk-On Sentiment and Limited Downside

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  • January 22, 2025
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USD/JPY is on its edge as divergence in policy speculations between Bank of Japan (BoJ) and Federal Reserve (Fed) outweighs the modest losing downside. Still, the interest rate hike for the BoJ in its meeting next week leaves a stark divergence from the probability of Fed lowering interest rates into the latter end of this year, which somewhat caps the serious losses for JPY. The USD/JPY pair continues to show resilience, holding below the key psychological mark of 155.00, amid a broader risk-on sentiment reflected in positive equity markets. Traders are treading cautiously, awaiting clarity from the BoJ’s policy decision, which will likely shape the near-term trajectory of the JPY. Meanwhile, technical indicators suggest limited bearish momentum, with spot prices poised to test immediate resistance near 156.00 or potentially climb toward multi-month highs if buying pressure sustains. KEY LOOKOUTS • Anticipated BoJ rate hikes and Fed rate cuts fuel contrasting market expectations, influencing the USD/JPY pair’s movement and limiting the Japanese Yen’s downside. • USD/JPY traded in a stable manner below 155.00, and with oscillators demonstrating weak bearish traction, there is a rather cautious mood for traders as the market waits for some clear technical breaks. • Upbeat equity markets have also negatively impacted the Japanese Yen’s safe-haven status, thereby allowing tailwinds for the pair’s recovery to key resistance. • Traders are awaiting the much-awaited BoJ policy meet, with the outcome to heavily influence near-term Japanese Yen dynamics. The Japanese Yen remains subdued as traders navigate the contrasting policy outlooks of the Bank of Japan (BoJ) and the Federal Reserve (Fed). With the BoJ expected to hike interest rates in its upcoming meeting and the Fed anticipated to cut rates later this year, the policy divergence adds uncertainty to the USD/JPY pair’s trajectory. Positive sentiment in equity markets further undermines the Yen’s safe-haven appeal, supporting a modest recovery in the pair. However, traders remain cautious, awaiting the BoJ’s decision, which will significantly impact near-term movement. On the technical front, the USD/JPY shows resilience below the 155.00 psychological mark, while oscillators signal limited bearish momentum, suggesting a measured approach to the pair’s next moves. The Japanese Yen is still under pressure as the BoJ and Fed policy expectations are contrasting, with the BoJ’s expected rate hike supporting it. Risk-on sentiment undermines the Yen, and traders await the BoJ’s decision for clearer direction. • The anticipation of a rate hike by the Bank of Japan supports the Japanese Yen and limits its downside potential. • Divergent expectations of Fed rate cuts later this year create a contrasting dynamic influencing the USD/JPY pair. • Positive equity market trends weaken the safe-haven appeal of the Japanese Yen, supporting modest gains in USD/JPY. • USD/JPY holds firm below the 155.00 mark, with oscillators showing limited bearish momentum, signaling cautious market sentiment. • Key resistance for USD/JPY lies at the 156.00 mark, with potential for further gains toward multi-month highs if buying pressure sustains. • Market participants remain on the sidelines, awaiting the BoJ’s policy decision to determine the near-term trajectory of the Yen. • The outcome of the BoJ’s two-day meeting is expected to be pivotal, potentially reshaping market sentiment and influencing JPY movements. The Japanese Yen remains under pressure as markets navigate contrasting policy expectations between the Bank of Japan (BoJ) and the Federal Reserve (Fed). As widely expected, a rate hike is in store during the BoJ’s two-day policy meeting. Still, later in the year, the Fed could cut interest rates, providing an opposing outlook for the JPY’s downside. This contrast along with broader risk-on equity market sentiment goes against the safe haven appeal of the Yen and hence modestly supports the USD/JPY. However, traders remain cautious, awaiting the BoJ’s decision, which could play a pivotal role in shaping the near-term trajectory of the Japanese Yen. USD/JPY Daily Price Chart. Source: TradingView Prepared By ELLYANA USD/JPY pair has shown resilience, holding steady below the psychological 155.00 mark despite bearish pressure. Oscillators on the daily chart indicate limited negative momentum, suggesting that a sustained break below key support levels is necessary for further depreciation. Immediate resistance lies near the 156.00 level, with potential for gains toward multi-month highs if buying pressure continues. The outcome of the BoJ’s policy decision will be critical in determining whether the pair accelerates higher or reverses course toward key support levels. As traders adopt a wait-and-watch approach, the Japanese Yen’s movement remains highly sensitive to policy signals and market sentiment shifts. TECHNICAL ANALYSIS USD/JPY is showing some strength as it is still holding below the psychological level of 155.00 and at the bottom side of a long-term ascending channel. Indicators on the day chart indicate that there is not sufficient bearish momentum for a big decline, meaning a major drop would need a good breakdown and persistent trade below the support of the trend-channel. Some support could be met around 154.50-154.45 and further declines could reach as low as 154.00 round figure and the mid-153.00s. On the upside, the 156.00 level acts as a strong resistance, followed by the 156.25-156.60 range. A breakout above these levels could pave the way for further gains toward the 157.00 mark and beyond, with the multi-month peak near 159.00 serving as a longer-term target. The overall setup suggests cautious optimism for bullish traders while urging bears to wait for clearer signals of sustained weakness. FORECAST The USD/JPY pair holds potential for further gains if buying pressure sustains above key resistance levels. The immediate hurdle lies near the 156.00 mark, followed by the 156.25-156.60 region. A breakout above these levels could trigger a rally toward the 157.00 psychological mark. If bullish momentum strengthens, the pair may test the 157.25-157.30 zone and extend gains to the 157.60 level, eventually targeting the multi-month peak near the 159.00 mark. Positive sentiment driven by risk-on market conditions and expectations of a dovish Fed could bolster this upward trajectory. Downside risks remain limited as the USD/JPY pair exhibits resilience near the 155.00 mark. A sustained break below this

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Currencies USD/JPY

Japanese Yen Retreats: Key Factors Behind USD/JPY Stability Above Mid-155.00s

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  • January 21, 2025
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The Japanese Yen has retreated from its one-month high against the US Dollar after a modest recovery for the greenback and as positive equity market sentiment weighs on the safe haven currency. Nonetheless, the Japanese Yen’s downward trend seems somewhat capped as speculative anticipation of an increase in Bank of Japan’s interest rate has gained momentum going into the remainder of the week, with an 80% probability priced by the markets. US President Donald Trump’s tariff comments have rekindled inflationary worries and trade war jitters, further adding to global economic uncertainty. On the technical side, the USD/JPY remains firm above the mid-155.00s, with levels playing both supporting and resisting roles as traders wait for the BoJ’s closely watched policy meeting. This development, coupled with macroeconomic signals and geopolitical dynamics, will determine the near-term path of the currency pair. KEY LOOKOUTS • Markets are eagerly awaiting the announcement by the Bank of Japan for the rate hike that may go a long way in determining the trend of Japanese Yen and other world currencies. • A moderate USD rebound, fueled by trade-related comments and inflation concerns, will be an important driver to watch for in the direction of the USD/JPY pair. • The area of 155.00 is key support, while resistance is seen near 156.25-157.00, and these levels will help guide traders to potential breakouts or reversals in the USD/JPY pair. • The threat of tariffs from US President Donald Trump against Canada and Mexico could reignite trade tensions, which may affect market sentiment and add volatility to global currency markets. The Japanese Yen has pulled back after hitting a one-month high against the US Dollar, with a combination of factors driving the move, including a modest recovery in the Greenback and improved risk sentiment in equity markets. However, speculation of an imminent Bank of Japan (BoJ) rate hike, fueled by hawkish remarks from BoJ officials and rising inflationary pressure, has limited the JPY’s depreciation. Meanwhile, US President Donald Trump’s tariff remarks have revived trade war fears, adding a layer of uncertainty to global markets. Technical analysis suggests resilience in the USD/JPY pair above the 155.00 mark, while traders await the crucial BoJ policy decision and monitor key support and resistance levels to gauge the pair’s next move. The Japanese Yen retreated from a one-month high against the US Dollar as markets anticipate a potential Bank of Japan rate hike. Meanwhile, Trump’s tariff remarks add global trade uncertainty. Technical levels above 155.00 support USD/JPY stability ahead of the BoJ policy meeting. • The Japanese Yen pulled back after reaching a one-month high against the US Dollar amid a modest USD recovery and improved equity market sentiment. • Market places are pricing 80% chance of a hike in Bank of Japan rate amid hawkish comments from officials as also rising inflationary pressure in Japan • US President Donald Trump’s suggestions for placing 25% tariffs on Canada and Mexico sparked renewed fears of a trade war, and added to uncertainty facing global economic and currency markets. • A modest USD rebound from its two-week trough, driven by inflation concerns and trade policy expectations, was also a tailwind for USD/JPY. • The USD/JPY price remains supported close to the 155.00 mark, where resistance levels from 156.25-157.00 levels are influencing trading dynamics in the short term. • Tuesday’s trade lacked any key economic data from both Japan and the US as market focus stayed on central bank meetings as well as geo-political cues. • This is a crucial two-day BoJ policy meeting that is likely to decide the course of action for the Japanese Yen and world market sentiments. The Japanese Yen (JPY) retreated from its one-month high against the US Dollar (USD), primarily due to the combination of several market dynamics such as modest recovery in the Greenback and positive risk appetite in equity markets. However, the downside for the JPY remains limited due to rising expectations of a Bank of Japan (BoJ) rate hike, with markets pricing in an 80% probability. Hawkish comments from BoJ officials and increasing inflationary pressure in Japan have strengthened this narrative. Meanwhile, US President Donald Trump’s announcement of proposed tariffs on Canada and Mexico has reignited trade war fears, adding volatility to global markets and contributing to a cautious trading environment. USD/JPY Daily Price Chart. Source: TradingView, Prepared By ELLYANA On the technical front, the USD/JPY pair has displayed resilience above the 155.00 level, with support and resistance levels guiding market participants. Traders look at a resistance area at 156.25-157.00 for upward momentum. A further decline should bring the pair to the vicinity of the 154.50 support area. With scarce economic reports out this week, all the attention goes to a two-day BoJ policy meeting that will take a big toll on the short-term trend of the JPY. This meeting combined with geopolitical factors and changing US monetary policy expectations will most probably be decisive in determining the USD/JPY pair direction. TECHNICAL ANALYSIS The USD/JPY pair is holding strong around the 155.00 level, which has acted as an important support in a multi-month ascending trend channel. A break below here could take prices lower towards 154.50 intermediate support, possibly to 154.00 and 153.00 psychological support. Conversely, resistance remains around the 156.25 region and last night’s high at 156.60. Break above this latter level might provide a gateway for a run towards 157.00 with the next gain going towards the 157.25-157.30 area and the round figure of 158.00. Traders will look for a decisive breakdown through these levels to confirm the next directional move. FORECAST The USD/JPY currency pair may find a path towards resuming the bullish drive, should it be able to sustain trading above the critical resistance located at 156.25, targeting levels at 156.60 and then reaching the psychological mark of 157.00. Further, breaking out above 157.30 might lead the currency pair towards the 158.00 mark and potentially towards retesting the multi-month high in the 159.00 zone. This rally may be further supported by a stronger

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