- The USD/JPY forecast shows higher demand for the yen.
- The yen rallied last week amid uncertainty regarding the global economy.
- The US economy added a smaller-than-expected 151,000 new jobs in February.
The USD/JPY forecast shows higher demand for the yen due to US trade policy uncertainty and a weak dollar. Market participants remain concerned about the impacts of Trump’s tariffs on the global economy. At the same time, labor market data on Friday confirmed fears of a slowdown in the US economy.
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Last week, the yen rallied as uncertainty regarding the global economy led to a migration from risky assets. Trump initially implemented tariffs on Canada, China, and Mexico, causing panic in the market. However, he later suspended tariffs on Canada and Mexico for another month. Still, it was not enough to ease trade war fears since Canada and Mexico are ready to respond to tariffs. Moreover, starting in April, Trump promised a reciprocal tariff on more countries.
Elsewhere, data on Friday revealed that the US economy added 151,000 new jobs in February. This number came in below the forecast of 159,000. Meanwhile, the unemployment rate rose to 4.1%, above estimates of 4.0%. The weak labor market data increased expectations for Fed rate cuts. Currently, traders are pricing three rate cuts in 2025. The more dovish outlook has weighed on Treasury yields and the dollar.
USD/JPY key events today
Market participants do not expect any high-impact reports from the US or Japan. Therefore, the price might consolidate.
USD/JPY technical forecast: Bears looking to break the 147.00 support
On the technical side, the USD/JPY price has paused near the 147.00 support level. However, it remains below the 30-SMA, with the RSI under 50, supporting a bearish bias. The price maintained a downtrend below the 30-SMA until it reached the 149.00 key level. There was a consolidation period as the price broke above the SMA. However, bears resumed the previous downtrend when the price eventually broke below the 149.00 support level.
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Therefore, the pause at the 147.00 level might only be brief to allow bears to rest and the SMA to catch up. Given the strong bearish bias, the price might soon break below 147.00 to retest the 145.00 support level. The downtrend will continue as long as the price keeps making lower highs and lows.
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