- The USD/JPY forecast indicates brief relief for the yen after a steep decline.
- The yen has weakened significantly following Trump’s announcement of a 25% tariff on Japanese goods.
- Market participants are awaiting the release of the FOMC meeting minutes.
The USD/JPY forecast indicates brief relief for the yen after a steep decline due to tariff concerns. However, the outlook for Japan’s economy has darkened following Trump’s threat of a 25% reciprocal tariff.
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The yen has weakened significantly this week following Trump’s announcement of a 25% tariff on Japanese goods, effective from August. The move came after trade talks between the US and Japan failed. Market participants are concerned that this could be the start of a trade war between the two partners. Such an outcome would hurt both economies and weaken their currencies.
However, at the moment, the dollar is rallying at the prospect of higher import costs. These might translate to higher inflation, forcing the Fed to keep interest rates high.
Furthermore, Trump has threatened a 50% tariff on copper imports that would again ignite tensions with many countries. In the short term, tariffs might be bullish for the dollar. However, in the long run, they might dim the outlook for the US economy and hurt its currency.
Elsewhere, market participants are awaiting the release of the FOMC meeting minutes. The report might contain clues about future policy moves. However, with tariff uncertainty, the outlook might become less clear.
USD/JPY key events today
- FOMC Meeting Minutes
USD/JPY technical forecast: Rally pauses for breath at the 147.01 level
On the technical side, the USD/JPY price has finally paused its steep rally near the 147.01 key level. However, the bullish bias remains strong, with the price well above the 30-SMA and the RSI near the overbought region.
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After such a strong move, bulls have paused for a breath at this level. Therefore, the price might consolidate as the SMA catches up. At the same time, it might pull back to retest the SMA as support. The bullish bias will remain as long as it stays above the SMA.
After a pause, bulls might regain momentum to break past the 147.01 level for a new high. Such a move would allow USD/JPY to retest the 148.02 key resistance. A break above would solidify the bullish bias.
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