- Summary:
- The USDJPY pair has been subdued by concerns over the impact of tariffs on the US economy amid BoJ interest rate hike sentiment.
The Japanese yen strengthened further against the US dollar on Friday, with the USDJPY retesting weekly lows of 154.83. The currency pair is subdued by weak dollar fundamentals, underlined by concerns over the impact of US trade tariffs and soft US jobs data.
US President Donald Trump’s speech grabbed headlines as he reiterated his stance that he could impose sanctions on multiple nations, including China, Canada, Mexico and the Eurozone. Analysts opine that tariffs could disrupt the global economy and increase pressure on the US dollar.
The Bank of Japan (BoJ) raised interest rates by 25 basis points to 0.50% on Thursday, in line with analysts’ forecasts. That brought the rates to the highest since 2008 and brought propulsion to the yen. Furthermore, the central bank’s Governor Kazuo Ueda said that the board could raise interest rates again after spring wage negotiations.
US President Donald Trump stated this week that tariffs could come into play as soon as February 1. Concerns over the tariffs’ impact have weighed down on the dollar, sending the DXY index to five-week lows. In addition, yields on benchmark 10-year US treasury bonds were down by two basis points at the time of writing.
USDJPY Prediction
USDJPY pivots at 156.10 and an extended resistance at that level will likely establish the first support at 155.53. If the sellers strengthen their control of the market, it could break below that level and potentially test the second support at 155.17.
On the other hand, the buyers will take control if the pair breaks above 156.10. The momentum will likely move higher and encounter the first hurdle at 156.47. However, a stronger momentum could break above that level and invalidate the downside narrative. If the momentum strengthens, it could extend gains to test the second resistance at 156.75.
