empty
14.04.2025 12:31 PM
USD/JPY. Analysis and Forecast

This image is no longer relevant

The Japanese yen continues to strengthen, remaining near its highest levels of 2024. This is driven by growing demand for traditional safe-haven assets amid a weakening U.S. dollar caused by the escalation of the trade war between the U.S. and China. Optimism over a potential trade deal between the U.S. and Japan, along with expectations of further interest rate hikes by the Bank of Japan in 2025 due to signs of rising inflation in Japan, also supports the yen.

The Bank of Japan's hawkish outlook contrasts sharply with expectations of more aggressive policy easing by the Federal Reserve, keeping the U.S. dollar near its lows from 2022.

This creates the groundwork for a continued downward trend in the USD/JPY pair.

On Friday, China announced an increase in tariffs on U.S. goods to 125%, while President Trump raised tariffs on Chinese imports to 145%. These actions have sparked concerns over the economic fallout, pushing investors toward safer assets like the Japanese yen.

Investor sentiment is optimistic about a positive outcome from U.S.–Japan trade talks. Trump stated that "strict but fair parameters" are being set for negotiations, while U.S. Treasury Secretary Scott Bessent noted that Japan could become a top priority in tariff discussions—further boosting hopes for a trade deal.

Japanese Prime Minister Shigeru Ishiba warned that "U.S. tariffs could disrupt the global economic order," while Finance Minister Shunichi Kato added that excessive exchange rate volatility is undesirable. These comments highlight the importance of currency stability for both countries.

According to the Bank of Japan, annual wholesale inflation accelerated to 4.2% in March, giving the central bank room to continue raising interest rates. Conversely, U.S. consumer price index data points to slowing inflation, likely prompting the Fed to cut rates.

Diverging policy expectations between the Bank of Japan and the Federal Reserve are adding further support for the yen. With the U.S. dollar remaining weak, the USD/JPY pair is being dragged toward multi-month lows.

Technical analysis shows the daily Relative Strength Index (RSI) is approaching the oversold zone, which may require caution from sellers.

A short-term consolidation or modest pullback is likely necessary before the downtrend resumes. The 142.00 level serves as key support, with a break below it exposing intermediate support at 141.60, followed by the psychological 141.00 mark. Continued selling could push the pair down toward the 140.30 level, exposing the low from the September 2024 swing.

On the other hand, a recovery above 143.00 will face resistance in the 143.50–143.55 range. Further gains could lead to a test of the 144.00 level and beyond. A decisive breakout above this area would trigger short-covering rally momentum toward the psychological 145.00 level.

This image is no longer relevant

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/CAD. Analysis and Forecast

The USD/CAD pair has been recovering for the third consecutive day from this year's lowest level, supported by renewed buying interest in the U.S. dollar. Yesterday's optimistic U.S. economic data

Irina Yanina 11:44 2025-05-28 UTC+2

DXY: U.S. Dollar Index Continues to Show Positive Momentum for the Second Day in a Row

On Wednesday, the U.S. Dollar Index (DXY) continued its upward momentum for the second consecutive day, rebounding from the monthly low reached earlier this week. The index rose

Irina Yanina 11:36 2025-05-28 UTC+2

Why Are Currencies Traded Against the Dollar Not Declining? (There Is a Chance EUR/USD May Resume Growth and USD/JPY May Fall)

We are truly living in an unusual time, where the classic principles of assessing market situations are being cast aside in favor of more pressing and, more importantly, unclear

Pati Gani 10:05 2025-05-28 UTC+2

Market Conditions Favor the Dollar

Yesterday, the U.S. dollar continued to strengthen against a number of risk assets—particularly gaining ground against the euro and the British pound. Strong U.S. economic data triggered significant movements

Jakub Novak 09:53 2025-05-28 UTC+2

The Market Has Left the Bad Behind

History repeats itself. Markets breathed a sigh of relief and bought the decline in the S&P 500 after Donald Trump's threats of 50% tariffs on the European Union were replaced

Marek Petkovich 09:47 2025-05-28 UTC+2

AUD/NZD. Analysis and Forecast

The AUD/NZD pair attempted to attract buyers on the decline, but so far, there hasn't been enough conviction to support a sustained move. Intraday upward momentum slowed following the Reserve

Irina Yanina 09:33 2025-05-28 UTC+2

GBP/USD Overview – May 28: What Is Trump's Plan This Time? Part 2

The GBP/USD currency pair also traded with a minimal decline. There was little news on the day, so the market decided to take a breather before the next upward move

Paolo Greco 08:00 2025-05-28 UTC+2

EUR/USD Overview – May 28: What Is Trump's Plan This Time?

On Tuesday, the EUR/USD currency pair showed a slight decline. The U.S. dollar continues to struggle to gain strength as market participants lack confidence in it. While it was previously

Paolo Greco 08:00 2025-05-28 UTC+2

What to Pay Attention to on May 28? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Wednesday. Among the more or less noteworthy reports, only Germany's unemployment rate and the change in the number of unemployed can be highlighted

Paolo Greco 06:53 2025-05-28 UTC+2

What Could Trump's Minimal Tariffs Lead To?

Donald Trump has given countries he claims are "robbing the U.S." a three-month deadline to reach trade agreements. As of now, two months into this deadline, only one deal

Chin Zhao 00:45 2025-05-28 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.