Key Analysis Points
- USD/JPY in a Strong Downward Trend
- US Currency Weakens Due to Trump's Policies
- Best USD/JPY Buying Levels
The downward shift in the direction of the USD/JPY pair strengthened during the week as the currency pair fell to the support level of 146.95, the lowest level for the currency pair in five months, before closing the week's trading stable around the 148.05 level, compensating for some of its losses from Jerome Powell's optimistic comments at the end of the week regarding the US economic performance despite the weaker than expected employment report. Recently, according to Forex market trading, the Japanese yen remained strong against the rest of the other major currencies in light of the Bank of Japan's determination to tighten its monetary policy.
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Powell: No Rush to Cut US Interest Rates
Before the close of trading last week, US central bank Chairman Jerome Powell continued to say that the Federal Reserve does not need to be “in a hurry” to cut US interest rates, given “solid” economic and labour market conditions, even as some of his colleagues hinted at greater concern about the outlook.
Speaking after the weaker-than-expected US employment report, Powell remained positive in remarks to the annual monetary policy forum at the University of Chicago Booth School of Business. Powell noted the greater uncertainty surrounding trade and other policies of the emerging Trump administration, but said the US economy is “in a good place” for now, with inflation heading toward the Fed’s 2% target and labour markets near full employment. Despite the growing uncertainty, he said “the costs of caution are very low.”
Powell added, 'We can wait, and we should wait.'
At its last meeting, the US Federal Reserve left the key federal funds rate unchanged in a target range of 4.25% to 4.5% after cutting it by 100 basis points in the last three meetings in 2024.
Trading Tips:
We advise you to take advantage of the recent decline in the dollar against the Japanese yen by looking for buying levels, and no matter how strong they are, do not risk it.
Eyes on Japanese Economic Growth Figures
This week, and through the results of the economic calendar data... The Japanese Cabinet Office will release the revised GDP data for the fourth quarter of 2024 at 0850 Japan time on Tuesday, March 11. Furthermore, the median forecast for GDP growth in the fourth quarter by 10 economists was 0.7% (expectations range from 0.5% to 0.8%), or 2.8% annually (2.2% to 3.0%).
Overall, Japan’s tepid economic growth has continued through most of 2024 after three quarters of declines, but consumption has cooled on rising living costs and the outlook for the world’s two largest economies is clouded by Trump’s tariffs, pointing to a flat performance in the first quarter of 2025, with a slight risk of contraction. Overall, Japan’s economic growth is expected to rise to 0.7% q/q, or 2.8% y/y, in October-December from +0.4% q/q (+1.7% y/y) in July-September, with no or only a small revision in the second reading. Japan’s preliminary fourth-quarter GDP data released last month showed the much stronger-than-expected growth was largely due to a technical rebound in net exports, up 0.7 percentage points (after four quarters of decline), which was driven by a sharp drop in imports and masked weak exports. Domestic demand had reduced GDP by 0.1 points in the fourth quarter after GDP in the third quarter had strengthened by 0.5 points, confirming the wobbly recovery.
USD/JPY Technical Analysis and Expectations Today:
As you can see on the daily chart, the general trend of the USD/JPY pair is getting stronger towards the downside. As we mentioned before, breaking the psychological level of 150.00 will increase the bears’ control over the trend and warn of a stronger downward move, which is what happened, and currently its losses were enough to push the technical indicators towards strong oversold levels, which gives forex investors the opportunity to think about buying the currency pair, but without risk and monitoring the influencing factors listed in the analysis. Currently, the closest support levels for the USD/JPY are 147.20, 146.00 and 145.20, respectively. On the other hand, and in the same time frame, there will be a break in the downtrend if the bulls succeed in pushing the currency pair towards the resistance levels of 151.40 and 152.60, respectively.
Want to trade our USD/JPY forex analysis and predictions? Here's a list of forex brokers in Japan to check out.