USDJPY: SELL 147.60, SL 148.00, TP 146.60 | 04 Abril 2025

Event to watch out for today:

15:30 EET. USD - Initial Jobless Claims Number

USDJPY:

The Japanese yen (JPY) jumped to a three-week high against its U.S. counterpart during the Asian session on Thursday after U.S. President Donald Trump imposed sweeping trade tariffs. Investors are increasingly concerned that the move could reshape the global trading system and undermine global economic growth. This, in turn, is triggering a new wave of risk flight and boosting demand for traditional safe-haven assets, including the yen.

Meanwhile, the risk-off flow leads to a sharp decline in US Treasury bond yields, further narrowing the rate differential between the US and Japan and favoring the lower-yielding yen. The US Dollar (USD), on the other hand, is falling back towards multi-month lows reached in March amid concerns over the impact of worsening global trade on the US economy. This, along with a number of weaker-than-expected US data, has heightened recession fears.

Such prospects could force the Federal Reserve (Fed) to resume its rate-cutting cycle soon. In contrast, traders are assessing the possibility of further interest rate hikes by the Bank of Japan (BoJ) amid signs of rising domestic inflation. This, in turn, should contribute to the relative growth of the yen, which, along with the prevailing bearish sentiment around the dollar, indicates that the path of least resistance for the USD/JPY pair lies on the downside.

Trading recommendation: SELL 147.60, SL 148.00, TP 146.60

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