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