- Amid strong risk aversion among investors and a flight to the Japanese Yen as a safe haven, selling pressures on the USD/JPY pair have intensified, with losses reaching the $141.60 support level, the lowest for the currency pair in seven months.
- The pair began the new trading week around these losses after failing to rebound upwards last week.
Yen Gains Await Bank of Japan Announcement
According to Forex currency trading experts, the Japanese Yen may stabilize around its strongest gains against other major currencies as investors react to the latest inflation data. Official figures showed that Japan's headline inflation fell to a four-month low of 3.6% in March, while core inflation rose in line with expectations to 3.2%. Market focus now shifts to the Bank of Japan's monetary policy meeting this week, where the central bank is widely expected to keep Japanese interest rates unchanged at 0.5%.
However, policymakers may revise their growth forecasts downwards amid increasing concerns about the impact of US tariffs on Japan's export-dependent economy. While the Bank of Japan is expected to maintain a gradual tightening path this year, driven by persistently high food prices and rising wages, the external trade environment continues to cast a shadow of doubt on its monetary stance. Consider that rising inflation comes at a time when Japan is engaged in difficult trade negotiations with the United States and faces new, stringent tariffs. Steel and aluminum exports are already subject to 25% tariffs, and a decision to impose a 25% tariff on car exports took effect earlier this month.
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Trading Tips:
The sharp downward movement of the USD/JPY pair will increase the idea of seizing buying opportunities. Monitor the influencing factors on the currency pair to choose the best trading opportunities.
Is Japan Manipulating Currency Exchange Rates?
In this regard, Japanese Finance Minister Katsunobu Kato told parliament last Friday that Japan is not taking any steps to deliberately weaken the Japanese Yen, rejecting US President Donald Trump's claims that Tokyo is intentionally devaluing its currency to support exporters. His remarks come ahead of a potential meeting with US Treasury Secretary Scott Bisant in Washington this week during the G20 finance ministers and central bank governors meeting and the International Monetary Fund (IMF) Spring Meetings. If this meeting takes place, it will serve as the main forum for Japan and the United States to address currency issues amid broader negotiations on tariffs that began earlier this week. The Japanese minister pointed out that Japan's latest intervention in the Forex market involved buying the Yen, not selling it, reflecting Tokyo's commitment to fair market operations.
While the Japanese minister acknowledged the US's keenness to raise the issue of exchange rates, he declined to speculate on potential talking points, noting that no date has yet been set for the meeting with Bisant.
USD/JPY Technical analysis and Expectations Today:
According to the performance on the daily chart above, the overall trend for the USD/JPY currency pair remains bearish. Breaking below the $141.60 support level will quickly move the bears towards the psychological support level of $140.00. From now until reaching this psychological level, keep in mind that technical indicators have moved towards strong oversold levels, as observed in the direction of the Relative Strength Index (RSI), MACD, and Stochastic.
Therefore, we still prefer the strategy of buying USD/JPY at every downward level. The most suitable buying recommendation currently is at $140.90 with a target of $144.80 and a stop-loss at $140.00. Currently, the currency pair is not awaiting significant influential economic data today. Therefore, the movement will depend on investors' risk appetite and expectations for the future policies of global central banks.
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