- The USD/JPY price analysis shows increased safe-haven demand for the yen.
- Investors panicked as tariffs on Canada and Mexico came into effect.
- More speculators are bullish on the yen.
The USD/JPY price analysis shows increased safe-haven demand for the yen as market participants worry about a likely global trade war due to Trump’s tariffs. At the same time, the yen remained strong on increasing expectations for Bank of Japan rate hikes.
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Last week, Trump confirmed the start of a 25% tariff on Canada and Mexico in March. On Tuesday, investors panicked as the tariffs came into effect. Moreover, Trump imposed an additional 10% tariff on Chinese goods. The new tariffs have raised the likelihood of a global trade war, pushing investors into safer assets like the yen. If this trend continues, Japan’s currency will keep climbing.
At the same time, the yen gained as data revealed that more speculators are bullish on the currency. The tides have changed for Japan’s economy. Inflation has increased, and consumption is at a healthier level. As a result, Bank of Japan policymakers have assumed a more hawkish tone. Meanwhile, market participants are expecting more rate hikes this year.
On the other hand, the dollar held steady against most peers as Treasury yields soared on Trump’s new tariffs. Market participants also focused on data from the previous session, showing a slight easing in manufacturing business activity in the US.
USD/JPY key events today
Market participants do not expect any high-impact reports from the US or Japan. Therefore, they will focus on developments in US trade policies.
USD/JPY technical price analysis: Bears challenge 149.00, aiming for a lower low
On the technical side, the USD/JPY price has paused its decline at the 149.00 support level. The price trades 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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The first time, USD/JPY paused at the 149.00 support, bulls emerged and broke above the 30-SMA to reach the 151.00 resistance. However, they failed to break above this level, allowing bears to return to the market with an engulfing candle. The price soon returned to the 149.00 support.
Given the strong bearish bias, USD/JPY will likely soon break below the 149.00 level to make a lower low. Such an outcome would clear the path to the 147.00 support level.
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