- The dollar recovered on Wednesday after Trump’s tariff policy plans became clearer.
- Traders look forward to central bank meetings in the US and Japan.
- Traders are pricing a 96% chance of a BoJ rate hike on Friday.
The USD/JPY forecast shows a pause in the dollar’s recent climb as market participants await key central bank decisions. Traders paused ahead of Friday’s Bank of Japan meeting, where the central bank might hike rates by 25-bps.
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The dollar recovered on Wednesday after Trump’s tariff policy plans became clearer. Although not immediate, the US president plans to impose a 25% tariff on imports from Mexico and Canada. At the same time, the government has united at a 10% tariff on goods from China. All this might happen by next month. However, experts believe the government might reveal concrete tariff plans in April.
Meanwhile, traders look forward to central bank meetings in the US and Japan. The Federal Reserve will meet next week, and economists expect a pause. Therefore, market participants will focus on the messaging for future policy moves. A hawkish outlook will boost the dollar. Meanwhile, a dovish one might lead to a pullback.
On the other hand, the Bank of Japan will meet on Friday, with traders pricing a 96% chance of a rate hike. Moreover, policymakers might signal more rate hikes to balance the impact of Trump’s policies on the global economy. At the same time, if the Fed remains hawkish, the dollar might pressure the yen lower. Therefore, the BoJ will have enough motivation to keep hiking rates.
USD/JPY key events today
- US unemployment claims
- President Trump speaks
USD/JPY technical forecast: Bulls take charge after RSI divergence
On the technical side, the USD/JPY price has broken above the 30-SMA resistance to indicate a bullish sentiment shift. This move came after the RSI made a bullish divergence, showing weak bearish momentum.
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The previous downtrend paused at the 155.01 support level, where bulls emerged. Although bears made another attempt to break below this level, the price made a large wick, showing a strong rejection. This allowed bulls to breach the 30-SMA resistance.
Currently, the price is eyeing the 157.01 resistance level. If it holds firm, USD/JPY will likely retest the 30-SMA as support before continuing higher. Meanwhile, if bulls are strong, they will break past the resistance to target the 158.74 key level.
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