USD/JPY Price Analysis – March 27, 2025
Daily Price Outlook
During the European trading session, the USD/JPY managed to gain traction and remained well bid around the 150.90 level.
However, the reason for its upward trend can be attributed to a combination of factors, including global risk sentiment, trade tensions, and expectations surrounding the Bank of Japan's (BoJ) interest rate hike.
USD/JPY Surge Amid Risk Sentiment and Trade Tensions
The Japanese Yen (JPY) faced some intraday selling pressure after a slight improvement in global risk sentiment, fueled by hopes for further stimulus measures from China. This development undermined the traditional safe-haven appeal of the JPY.
However, the uncertainty surrounding US President Donald Trump's tariff plans, particularly the 25% tariffs on imported vehicles and auto parts set to take effect on April 2, continued to weigh on global sentiment, acting as a support for the safe-haven Yen.
BoJ's Rate Hike Expectations and Fed's Dovish Stance Strengthen JPY
Furthermore, the ongoing expectations that the BoJ will continue raising interest rates, supported by strong wage growth and inflationary trends, have contributed to the JPY’s strength.
BoJ’s new board member, Junko Koeda, noted that inflation was moving toward the 2% target sustainably, strengthening the belief in further tightening. Meanwhile, the Federal Reserve's dovish stance, signaling potential rate cuts later this year, has widened the divergence between the Fed and the BoJ, supporting the JPY's appeal.
USD/JPY Under Pressure as Economic Data and Fed Rate Cut Speculation Keep Traders Cautious
On the other hand, a modest pullback in the US Dollar (USD) from its recent three-week high prevented the USD/JPY from reaching higher levels. Economic data, including the February durable goods orders and expectations for the upcoming Personal Consumption Expenditure (PCE) Price Index, also kept traders cautious.
With the Federal Reserve signaling two potential rate cuts this year, market participants are closely watching the release of the US PCE index on Friday for further indications of the Fed's rate path.
Moving ahead, traders are waiting for important economic data, including Tokyo’s Consumer Price Index (CPI) and the US Personal Consumption Expenditure (PCE) Price Index, set to be released on Friday.
Apart from this, the market will continue to focus on geopolitical tensions and central bank policies, which are likely to drive the next moves in the USD/JPY.
USD/JPY – Technical Analysis
The USD/JPY pair is trading slightly higher at 150.418, maintaining its position above the key pivot point of 150.082. The 50-period Exponential Moving Average, currently at 150.042, aligns closely with this pivot, acting as a technical base and reinforcing short-term bullish sentiment.
The immediate resistance sits at 150.946. A decisive break above this level could propel the pair toward the next resistance zones at 151.317 and 151.714.
These levels mark key psychological and historical barriers, and a sustained advance through them may signal a continuation of the broader uptrend fueled by policy divergence between the Federal Reserve and the Bank of Japan.
On the downside, initial support rests at 149.560, followed by 149.145 and deeper at 148.612. A break below these zones would challenge the current bullish structure and suggest a potential shift in momentum, particularly if accompanied by dovish U.S. economic data or geopolitical risk aversion.
As long as the price holds above the pivot and 50 EMA, the bullish bias remains intact. A suggested entry above 150.089 targets a move to 150.887, with a stop loss at 149.651 to manage downside risk.
Traders should monitor upcoming U.S. inflation and job data for fresh directional cues, as these may significantly impact Fed rate expectations and dollar flows.
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