USDJPY: BUY 149.80, SL 149.20, TP 150.60 | 02 Abril 2025

Event to watch out for today:

17:00 EET. USD - ISM Manufacturing Index

USDJPY:

The Japanese Yen (JPY) is rising against its US counterpart during Tuesday's Asian session and so far appears to have paused the previous day's correction from a more than one-week high. The Bank of Japan (BoJ) Tankan survey showed that Japanese businesses have raised their inflation forecasts one year, three years and five years ahead. This in turn bolsters the case for further rate hikes by the BoJ and is a key factor supporting the yen. Moreover, the moderate decline in the US dollar (USD) is keeping the USD/JPY pair below the psychological 150.00 mark.

However, JPY bulls lack confidence amid a positive reversal in global risk sentiment, which tends to undermine safe-haven currencies. In addition, lower expectations that the Bank of Japan will raise the discount rate at a faster pace, amid concerns over slowing economic growth due to US tariffs, acts as a headwind for the JPY. Nevertheless, the Bank of Japan's hawkish outlook remains strongly at odds with the Federal Reserve's (Fed) projections of an imminent resumption of the rate-cutting cycle. This, in turn, suggests that the path of least resistance for the low-yielding JPY still lies to the upside.

Trading recommendation: BUY 149.80, SL 149.20, TP 150.60

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