- The USD/JPY forecast indicates increasing panic over the global economy.
- The yen was on the front foot at the start of the week.
- Data showed that the US core PCE price index increased by a bigger-than-expected 0.4%.
The USD/JPY forecast indicates increasing panic over the global economy as Trump’s April tariffs loom. As a result, the yen soared on Monday amid safe-haven demand. On the other hand, the dollar collapsed as Treasury yields fell due to increased demand for bonds.
-Are you looking for the best AI Trading Brokers? Check our detailed guide-
The yen was on the front foot to start the week as market participants worried about new Trump tariffs beginning on Wednesday. The US president has promised a 25% auto tariff and reciprocal tariffs on almost all countries that trade with the US. As a result, experts are forecasting an escalation of the global trade war. At the same time, the rising cost of goods might drive inflation higher in most countries.
Weak global growth will mean an erosion of investors’ money. Therefore, many traders prefer to put their cash in safe-haven assets like the yen, gold, and US debt. The dollar has remained fragile since Friday despite data showing an unexpected surge in underlying inflation.
Notably, the core PCE price index increased by 0.4%. Meanwhile, economists had expected an increase of 0.3%. The inflation report will keep the Fed cautious. This week, traders will watch the US monthly employment figures.
USD/JPY key events today
Market participants do not expect any key economic reports today. Therefore, all focus will remain on the looming Trump tariffs.
USD/JPY technical forecast: Sentiment shifts with channel breakout
On the technical side, the USD/JPY price has broken out of its bullish channel, indicating a bearish shift in sentiment. Currently, the price trades well below the 30-SMA, and the RSI is nearing the oversold region. Therefore, the bearish bias is strong.
-Are you looking for the best MT5 Brokers? Check our detailed guide-
Initially, the price made higher highs and lows within a bullish channel. However, the rally paused when bulls met the 151.01 resistance level. The price made a double top at this level, plus a bearish RSI divergence, signalling a looming reversal. Soon after, a surge in bearish momentum saw the price break below the 30-SMA. At the same time, the RSI dipped into bearish territory below 50.
Given the solid bearish momentum, the price will soon retest the 148.25 support level If the downtrend continues, USD/JPY will likely reach the 146.75 support level.
Looking to trade forex now? Invest at eToro!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
