- The USD/JPY price analysis shows the yen losing its shine.
- Trump’s tariffs might hurt Japan’s export-reliant economy.
- US sales increased by 0.2% compared to estimates of a 0.6% rise.
The USD/JPY price analysis shows the yen losing its shine amid uncertainty regarding the impacts of Trump’s tariffs on Japan’s economy. At the same time, market participants are gearing up for the Bank of Japan and Fed policy meetings.
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Initially, the yen gained amid trade war fears and tariff uncertainty. Traders rushed to the safe-haven currency as Trump ignited more trade wars. However, the focus has now shifted to Japan’s export-reliant economy. Eventually, Trump’s tariffs will affect most of the US’s trading partners. Therefore, Japan is also at risk of a slowdown in case of a trade war. Such an outcome would force the Bank of Japan to rethink its policy path.
Recent policymaker remarks have shown a hawkish outlook and pushed up rate hike expectations. However, Trump is reshaping the outlook for monetary policy in most major economies. Therefore, traders will closely follow the BoJ meeting to see whether the tone has changed. A less hawkish tone will further hurt the yen.
On the other hand, the dollar found relief against the yen despite more downbeat US economic data. US sales increased by 0.2% compared to estimates of a 0.6% rise. Nevertheless, traders expect the Fed to keep rates unchanged on Wednesday.
USD/JPY key events today
Market participants do not expect key reports from Japan or the US. All focus is on the BoJ and Fed meetings, due on Wednesday.
USD/JPY technical price analysis: Bulls find their feet in a new uptrend
On the technical side, the USD/JPY price is on a strong rally after breaking above the 149.00 resistance level. The price trades far above the 30-SMA with the RSI near the overbought region, indicating a solid bullish bias.
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At the same time, the price has created a bullish channel with a clear support and resistance trendline. Bulls took charge near the 147.02 support level and broke above the 30-SMA. After this, the price pulled back to retest the SMA before climbing to make a higher high. This confirmed a new bullish trend.
Currently, bulls are targeting the channel resistance. Moreover, there is a strong hurdle at the 151.01 level. A break above this level will strengthen the bullish bias.
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Saqib Iqbal
