|

USD/JPY Price Forecast: Bulls have the upper hand while above 150.00 resistance breakpoint

  • USD/JPY seesaws between tepid gains/minor losses through the early European session.
  • Hawkish BoJ minutes reaffirm rate-hike bets and underpin the JPY, which caps the major. 
  • The USD preserves its recent recovery gains and acts as a tailwind for the currency pair.

The USD/JPY pair retreats from the vicinity of the 151.00 mark, or a nearly three-week high touched earlier this Tuesday, though it lacks any follow-through selling. As investors look past Monday's downbeat PMI data from Japan, the Japanese Yen (JPY) attracts some buyers in reaction to the Bank of Japan's (BoJ) hawkish outlook. In fact, minutes of the January BoJ policy meeting revealed a growing consensus among policymakers that further tightening would be appropriate if the outlook for economic activity and prices hold. Adding to this, BoJ Governor Kazuo Ueda said on Monday that our policy purpose is to achieve stable prices and that the central bank will adjust the degree of monetary easing if the 2% inflation target is likely to be achieved. 

This comes on top of expectations that strong wage growth for the third consecutive year could filter into broader inflation trends and back the case for more interest rate hikes by the BoJ. Meanwhile, Kyodo news agency reported that Japan's Prime Minister Shigeru Ishiba expressed his intention to introduce robust measures to combat rising prices after the fiscal 2025 budget was passed. However, hopes for less disruptive US trade tariffs, the Russia-Ukraine peace deal, and the optimism over China's stimulus measures hold back traders from placing aggressive bullish bets around the safe-haven JPY. Reports on Sunday indicated that US President Donald Trump is planning a narrower, more targeted agenda for reciprocal tariffs set to take effect on April 2. 

Meanwhile, talks between the US and Russian officials concluded day-long talks in Saudi Arabia focused on a narrow proposal for a Black Sea maritime ceasefire deal. According to Russian state media, RIA, a joint statement is expected on Tuesday. Adding to this, the Financial Times reported that China is considering including services in a subsidy program to stimulate consumption, further boosting investors' confidence and undermining the safe-haven JPY. The US Dollar (USD), on the other hand, preserves its recent recovery gains and sits near a three-week high touched in reaction to Monday's better-than-expected US Composite PMI, which rose to 53.5 in March from the 51.6 previous month. This further lends some support to the USD/JPY pair. 

Traders now look forward to Tuesday's US economic docket – featuring the release of the Conference Board's Consumer Confidence Index, New Home Sales, and the Richmond Manufacturing Index. Apart from this, speeches from influential FOMC members could drive the USD demand and provide some impetus to the USD/JPY pair later during the North American session. The focus, however, will remain glued to the Tokyo CPI and the US Personal Consumption Expenditure (PCE) Price Index – the Fed’s preferred inflation gauge – on Friday. The latter should provide cues about the Fed's future interest rate-cut path, which will play a key role in providing some meaningful impetus to the Greenback and help in determining the next leg of a directional move for the USD/JPY pair.

USD/JPY 4-hour chart

fxsoriginal

Technical Outlook

From a technical perspective, the overnight breakout above the 150.00 psychological mark, which coincided with the 200-period Simple Moving Average (SMA) on the 4-hour chart, was seen as a key trigger for bullish traders. Moreover, positive oscillators on the daily chart support prospects for a further appreciating move for the USD/JPY pair. Hence, any subsequent pullback could be seen as a buying opportunity and remain limited near the aforementioned resistance breakpoint. 

A convincing break below, however, could make the USD/JPY pair vulnerable to accelerate the slide towards the 149.30-149.25 intermediate support en route to the 149.00 round figure and the 148.70-148.65 horizontal zone. Failure to defend the said support levels will suggest that the recent recovery from a multi-month low has run out of steam and shift the near-term bias back in favor of bearish traders.

On the flip side, bullish traders might now wait for a sustained strength beyond the 151.00 mark before placing fresh bets. This is followed by the monthly swing high around the 151.30 area, above which the USD/JPY pair could test a technically significant 200-day Simple Moving Average (SMA), currently pegged around the 151.75 region, before climbing to the 152.00 round figure. The momentum could extend further towards the 152.30 intermediate hurdle en route to the 153.00 mark.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to PremiumSign In

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD holds around 1.1750 after weak German and EU PMI data

EUR/USD maintains its range trade at around 1.1750 in European trading on Tuesday. Weaker-than-expected December PMI data from Germany and the Eurozone make it difficult for the Euro to find demand, while investors refrain from taking large USD positions ahead of key employment data.

GBP/USD climbs above 1.3400 after upbeat UK PMI data

GBP/USD gains traction and trades in positive territory above 1.3400 on Tuesday as the British Pound benefits from upbeat PMI data. Later in the day, crucial data releases from the US, including Nonfarm Payrolls, Retail Sales and PMI, could trigger the next big action in the pair.

Gold retreats from seven week highs on profit-taking; all eyes on US NFP release

Gold price loses momentum below $4,300 during the early European trading hours on Tuesday, pressured by some profit-taking and weak long liquidation from the shorter-term futures traders. Furthermore, optimism around Ukraine peace talks could weigh on the safe-haven asset like Gold.

US Nonfarm Payrolls expected to point to cooling labor market in November

The United States Bureau of Labor Statistics will release the delayed Nonfarm Payrolls (NFP) data for October and November on Tuesday at 13:30 GMT. Economists expect Nonfarm Payrolls to rise by 40,000 in November. The Unemployment Rate is likely to remain unchanged at 4.4% during the same period.

NFP preview: Complex data release will determine if Fed was right to cut rates

The long wait is over, and the Bureau of Labor Statistics in the US will release nonfarm payrolls reports for both November and October at 1330 GMT on Tuesday. The overall NFP figure for October is expected to be -10k, however, it is expected to be influenced by a massive 130k drop in federal department workers. 

BNB Price Forecast: BNB slips below $855 as bearish on-chain signals and momentum indicators turn negative

BNB, formerly known as Binance Coin, continues to trade down around $855 at the time of writing on Tuesday, after a slight decline the previous day. Bearish sentiment further strengthens as BNB’s on-chain and derivatives data show rising retail activity.