USD/JPY Price Analysis – March 20, 2025
Daily Price Outlook
During the European trading session, the USD/JPY currency pair continued its downward trend, hovering around the 148.50 level.
The primary factor behind this decline is the growing expectation that the Bank of Japan (BoJ) will continue raising interest rates throughout the year, which is strengthening the Japanese yen.
In addition, global uncertainty surrounding US President Donald Trump's trade policies and geopolitical risks is adding to the appeal of the Japanese Yen as a safe-haven asset. These factors have contributed to the slide in the USD/JPY pair.
Moreover, the modest rebound in the US Dollar has prevented a sharper decline in the USD/JPY pair, as the USD continues to be supported by investor sentiment.
However, expectations that the Federal Reserve will cut interest rates multiple times this year are limiting the USD's strength, capping further losses in the USD/JPY pair.
Bank of Japan and US Federal Reserve Decisions Impact the USD/JPY
The Bank of Japan (BoJ) recently finished its two-day policy review and decided to keep interest rates unchanged. BoJ Governor Kazuo Ueda mentioned that Japan's economy and inflation are uncertain.
He emphasized that reaching the 2% inflation target is important for the BoJ's long-term credibility and that the bank will take action if needed.
This has led to market speculation that the BoJ may raise rates in the future, which could strengthen the Japanese yen (JPY).
Meanwhile, the US Federal Reserve kept interest rates the same in its latest meeting and suggested there could be two 25-basis-point rate cuts by the end of the year.
The Fed also lowered its growth forecast due to concerns about President Trump's trade policies affecting the US economy.
However, the Fed raised its inflation forecast, which has helped support the US dollar. Despite being cautious, the market still expects a high chance (over 65%) that the Fed will start cutting rates later this year.
Geopolitical Risks and Safe-Haven Demand Boost JPY
Further exacerbating the downward pressure on USD/JPY is the escalating geopolitical risks in the Middle East. Tensions between Israel and Gaza, coupled with Russian President Vladimir Putin’s rejection of a proposed ceasefire with Ukraine, are increasing uncertainty in the global landscape.
As a result, the Japanese Yen's safe-haven status has been reinforced, adding to the downward momentum of the USD/JPY pair.
USD/JPY – Technical Analysis
USD/JPY is trading near 148.62, up 0.02%, as buyers attempt to regain momentum following a brief consolidation. The pair is holding above the pivot level of 148.18, reinforcing the underlying bullish trend.
The 50-day EMA at 149.08 remains a key resistance zone, limiting further upside potential. If the pair breaks above 148.94, a rally toward 149.15 and 149.38 could follow.
However, sustained strength beyond these levels would require a broader shift in market sentiment, particularly from Federal Reserve policy expectations and risk appetite trends.
On the downside, 147.83 serves as immediate support, with a break below exposing 147.41 and 147.02. A break above 148.94 would confirm further upside, while a failure to hold 148.18 could introduce selling pressure.
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