- The USD/JPY forecast shows further dollar weakness.
- US consumer sentiment came in at 50.8 compared to expectations of 53.1.
- Trump’s tariff threats caused some uncertainty in the market.
The USD/JPY forecast shows further dollar weakness after a downgrade to the US government’s credit rating. At the same time, market participants were worried about progress on trade negotiations between the US and its trading partners.
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The dollar fell on Friday after data revealed weak consumer sentiment. According to the report, consumer sentiment came in at 50.8 compared to expectations of 53.1. The unexpected drop revealed that consumers were still not confident in the economy.
Moreover, the greenback started the week down against most of its peers, including the yen. This happened after Moody’s downgraded the US government’s credit rating, citing its growing debt size. This was another reason for traders to dump the dollar and buy the yen.
Furthermore, demand for the safe-haven yen increased after reports that Trump was threatening tariffs on countries that are not negotiating in good faith. The US has announced trade deals with the UK and China, which boosted sentiment. However, talks with India, Japan, and South Korea seem to have stalled. As a result, Trump’s tariff threats caused some uncertainty in the market.
Meanwhile, BoJ policymakers are ready to keep hiking interest rates as long as the economy pushes past Trump’s tariff impacts.
USD/JPY key events today
Market participants do not expect any key economic releases from the US and Japan.
USD/JPY technical forecast: Bears reach a pivotal support zone
On the technical side, the USD/JPY price has pulled back and is approaching its support trendline. The price trades below the 30-SMA, with the RSI under 50, indicating a bearish bias. At the same time, the price has reached the 0.618 Fib retracement level that might act as a support.
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Therefore, USD/JPY might soon bounce higher. The price has maintained a shallow uptrend that chops through the SMA but respects the trendline. Consequently, the uptrend will continue if bulls return near the trendline support. Such an outcome would allow the price to break above the 146.02 resistance level and the 30-SMA. Bulls would likely break above the 148.51 resistance level to make a new high.
On the other hand, a break below the trendline would signal a shift in sentiment. It would allow bears to retest the 142.55 support level.
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Saqib Iqbal
