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24.04.2025 11:35 AM
USD/JPY. Analysis and Forecast

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The Japanese yen maintains a bullish tone despite certain headwinds and remains in focus as renewed global risk aversion fuels demand for safe-haven assets.

Diminishing hopes for a swift resolution to the U.S.–China trade conflict, along with speculation that Japan may reach a deal with the U.S. and growing expectations that the Bank of Japan (BoJ) may raise interest rates, are all supporting demand for the yen. Additionally, the widening policy divergence between the Federal Reserve and the BoJ adds further pressure on the dollar, favoring the strength of the Japanese currency.

Recent comments by Japan's Finance Minister Katsunobu Kato have highlighted the country's growing concerns over U.S. tariff policy and its impact on financial markets. The uncertainty created by these tariffs could indeed pressure Japan's economy, a concern echoed by BoJ Governor Kazuo Ueda, who signaled that monetary policy measures might be necessary.

The visit of Economic Revitalization Minister Ryosei Akazawa to the U.S. for tariff negotiations may prove to be a key step toward mitigating negative effects on Japan's economy. Still, investors remain optimistic about the likelihood of a BoJ rate hike in 2025, reflecting confidence in a sustained rise in inflation above the 2% target.

Meanwhile, expectations of rate cuts from the Federal Reserve are driving a significant divergence in monetary policy between the U.S. and Japan. Traders are already pricing in a renewed Fed easing cycle, expected to begin in June, with at least three rate cuts forecast by the end of the year.

Technical Outlook:

  • The overnight close above the 143.00 level serves as an important bullish signal for USD/JPY. Hourly chart oscillators remain in positive territory, potentially sustaining buying interest around the 142.45–142.40 zone.
  • A drop below the psychological 142.00 level could expose the pair to further downside toward the 141.10–141.00 area, with additional support seen around the 100- and 200-hour SMAs, and an intermediate floor at 140.50. A break below the key 140.00 mark would pave the way for deeper losses.

On the other hand, a renewed push above 143.00 may encounter resistance near 143.55 or yesterday's high. A sustained breakout above 144.00 would likely trigger a stronger rebound in USD/JPY.

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Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
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