- The US Dollar against the Japanese Yen has been trading in a narrow range and a neutral position in recent trading sessions, but there have been attempts by bulls to move higher, with gains not exceeding the resistance level of 156.70 before stabilizing around the 156.50 level at the time of writing this analysis.
- The currency pair is in a wait-and-see mode pending the announcement of the Bank of Japan and a clear vision of the policies of the new US administration.
- Recently, Forex traders reacted to the latest comments by US President Donald Trump, who threatened to impose tariffs on China, Mexico, Canada, and the European Union, increasing the risks of a global trade war.
Overall, the most supportive outcome for the US dollar would involve Trump signalling comprehensive tariffs on imports, which would raise inflation and interest rates in the United States. It would also punish currencies belonging to major exporters. Instead, Trump tasked federal agencies with studying current trade imbalances and tariff scenarios, asking them to report back on April 1st. At this stage, key names such as Jameson Greer will be installed in the government and will be able to lead the new agenda.
Trading Tips:
Dear TradersUp follower, the Japanese yen will remain in a state of waiting until the reaction to the decisions of the Japanese central bank, in addition to monitoring the appetite of investors to risk or not.
Japanese bond yields rise before the meeting of the Bank of Japan
According to recent trading, the yield on the Japanese government bond for 10 years rose to more than 1.2%, recovering from its lowest levels in two weeks, with growing expectations that the Bank of Japan will raise interest rates this week after hawkish comments from central bank officials. As is known, raising interest rates will increase short-term borrowing costs in Japan to 0.5%, the highest level since the global financial crisis in 2008.
Will the Japanese central bank raise interest rates?
In this regard, Bank of Japan Governor Ueda recently indicated that the central bank would consider raising interest rates if the economy continued to perform well, while Deputy Governor Himeno noted that it would be unusual for real interest rates to remain negative once Japan had overcome deflationary pressures. The Bank of Japan is also expected to revise its inflation forecast upwards, amid growing expectations that wage increases will help Japan achieve its 2% inflation target sustainably.
USD/JPY Technical analysis and Expectations Today:
Dear reader, the performance of the USD/JPY currency pair remains neutral. However, we still prefer buying the currency pair from every downward level. Currently, the closest support levels on the daily chart are 154.70 and 152.90 respectively. Conversely, and on the same timeframe, the resistance of 158.30 will remain a key for the bulls to move quickly to the psychological resistance of 160.00, which will move the technical indicators towards strong overbought levels, led by the Relative Strength Index and the Stochastic Oscillator. At the same time, talk of Japanese intervention in the Forex markets to prevent further decline in the value of the Japanese Yen will increase.
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