Home USD/JPY Forecast: Yen Outshines Dollar as a Safe Haven

USD/JPY Forecast: Yen Outshines Dollar as a Safe Haven

  • Risk aversion took hold amid growing concerns about the banking industry.
  • Consumer confidence in the United States dropped to a nine-month low in April.
  • The Bank of Japan is anticipated to maintain its monetary policy on Friday.

Today’s USD/JPY forecast is bearish. On Tuesday, the safe-haven currencies, the dollar, and the yen, increased as risk aversion took hold. There are growing concerns about the banking industry and the global economy.

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A poor consumer confidence report and a fall in Federal Reserve manufacturing data further boosted the appeal of safe-haven assets.

According to data, consumer confidence in the United States dropped to a nine-month low in April. The Conference Board stated that the consumer confidence index slipped from a revised 104.0 in March to 101.3. This was the lowest point since July 2022.

The United States Richmond Fed manufacturing index also declined in April. It fell to -10, marking the fourth consecutive month of contraction.

UBS reported a 52% decline in quarterly profits. However, the news of falling deposits at First Republic Bank served as a warning that stability risks have not completely subsided.

Even though BOJ’s Kazuo Ueda showed he was not in a rush to change policy, the yen strengthened and behaved like a classic haven pushing USD/JPY lower. 

According to the country’s former top currency diplomat Hiroshi Watanabe, the BOJ is expected to maintain its monetary policy on Friday. Due to the weak economy, the bank may struggle to boost interest rates this year from the current extremely low levels.

USD/JPY key events today

Investors will pay close attention to the US durable goods orders, yet another indicator of economic health. They will also pay attention to developments in the banking industry.

USD/JPY technical forecast: Imminent bearish trend reversal

USD/JPY technical forecast
USD/JPY technical forecast chart

USD/JPY bears are on the brink of confirming a trend reversal in the 4-hour chart. The price has fallen below the trendline support, the first sign of a shift in sentiment. The second sign is that the price has respected the 30-SMA as resistance and made a lower high.

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The RSI also supports the bearish bias, which has gone far below 50. For bears to confirm a reversal, the price must break below the 133.50 resistance level and make a lower low. A break below 133.50 would allow the price to fall to the next support at 132.25.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.