- The USD/JPY forecast shows solid demand for safe-haven assets like the yen.
- Trump announced new tariffs affecting almost all its trading partners.
- Market participants are pricing a higher 55% chance of a Fed rate cut in May.
The USD/JPY forecast shows solid demand for safe-haven assets like the yen amid growing global economic uncertainty. Meanwhile, the dollar slipped as market participants worried about the impact of Trump’s trade policies on the economy. At the same time, the greenback faced pressure from a rise in Fed rate cut expectations.
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The yen held steady at the start of the week as safe-haven demand remained high. Traders started flocking to Japan’s currency last week after Trump announced new tariffs affecting almost all its trading partners. As a result, worries about an escalation in trade wars dampened risk appetite.
At the same time, market participants worried about the impact of these tariffs on the US economy. Most major companies depend on exports and imports. Therefore, an increase in prices will directly impact business.
Moreover, the labor market might suffer as companies reduce their workers to adjust to the rising costs. Such an outcome would put pressure on the Federal Reserve to lower borrowing costs and spur growth. Currently, market participants are pricing a higher 55% chance of a rate cut in May.
USD/JPY key events today
Market participants do not expect any key economic releases from Japan or the US. Therefore, they will keep digesting recent US trade policy changes.
USD/JPY technical forecast: Bears poised to make new lows below 145.01
On the technical side, the USD/JPY price has paused near the 145.01 support level after a steep decline. Still, the bearish bias remains strong since the price sits far below the 30-SMA with the RSI below 50.
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Bears took over from bulls when the price paused at its peaks and the RSI made a bearish divergence. As a result, USD/JPY broke below the SMA. After pulling back to retest the SMA line, the price collapsed in a steep downtrend, breaking below the 146.75 support. The decline has paused at the 145.01 level, allowing the price to retest the recently broken 146.75 level.
Given the solid bearish bias, the price might soon break below 145.01 to make a new low. However, if the support holds firm, it might consolidate before breaking below the support.
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