- The USD/JPY outlook indicates increased demand for the safe-haven yen.
- Market participants dumped risky assets in the panic that followed Trump’s new tariffs.
- The US will release its crucial nonfarm payroll report.
The USD/JPY outlook indicates increased demand for the safe-haven yen amid escalating fears of the impact of Trump’s tariffs on the global economy. Meanwhile, market participants are looking forward to the nonfarm payrolls report for clues on Fed policy.
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The yen strengthened as market participants dumped risky assets in the panic that followed Trump’s new tariffs. The US president implemented tariffs on Canada, Mexico, and China. Furthermore, he promised a reciprocal tariff starting in April that will affect more countries. These policy changes ignited trade wars that have dimmed the outlook for the global economy. The US economy is also under threat since many companies depend on imports and exports. A decline in trade will, therefore, leave them in the dark.
Furthermore, the yen remained strong due to the recent rise in BoJ rate hike expectations. Higher inflation in Japan has convinced speculators that the Bank of Japan will implement more rate hikes. Therefore, traders are bullish on the yen.
Meanwhile, the US will release its crucial nonfarm payroll report, showing the state of employment. Soft data will raise Fed rate cut bets, further hurting the greenback. On the other hand, a rebound in employment would allow the dollar to recover.
USD/JPY Forecast:
- US average hourly earnings m/m
- US nonfarm employment change
- US unemployment rate
- Fed Chair Powell Speaks
USD/JPY technical outlook: Downtrend nears the 147.00 key level
On the technical side, the USD/JPY price is nearing the 147.00 support level, a new low in the downtrend. The price trades far below the 30-SMA, showing bears are in the lead. At the same time, the RSI trades below 50, indicating solid bearish momentum.
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USD/JPY has maintained its downtrend, making lower highs and lows. However, bulls have also tried several times to take control by breaking above the 30-SMA. Still, the price has reached fresh lows. If this momentum continues, bears will break below the 147.00 key level to make new lows.
However, before the break, the price might pause or pull back to retest the 30-SMA. The bearish bias will remain strong as long as the price stays below the 30-SMA with the RSI under 50.
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