USDJPY: SELL 148.90, SL 150.20, TP 147.30 | 07 Marzo 2025

USDJPY:

The positive risk-off tone, tariff volatility and rising US bond yields are putting upward pressure on USD/JPY. Betting on a BoJ rate hike and a narrowing US-Japan rate differential should continue to support the Japanese Yen.

The Japanese Yen (JPY) declined during the Asian session on Thursday, although it remains close to the multi-month high reached against its US counterpart earlier this week. Concerns that US President Donald Trump may impose new tariffs against Japan, along with a good bounce in US Treasury bond yields and an overall positive risk sentiment, undermined the safe-haven yen. However, growing confidence that the Bank of Japan (BoJ) will continue to raise interest rates may deter bears from aggressively betting on the yen.

Meanwhile, the BoJ's outlook continues to support Japanese government bond (JGB) yields. In contrast, US Treasury yields remain near the lowest levels of the year amid expectations that Trump's trade tariffs could trigger a sharp slowdown in US economic growth and force the Federal Reserve (Fed) to cut interest rates several times in 2025. A narrowing yield differential between the US and Japan should help limit further yen depreciation and limit the USD/JPY pairing amid bearish sentiment on the US dollar (USD).

Trade recommendation: SELL 148.90, SL 150.20, TP 147.30

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