USDJPY: BUY 150.90, SL 150.20, TP 152.15 | 27 March 2025

USDJPY:

The Japanese Yen (JPY) experienced a decline during the Asian session on Wednesday following the release of the Japanese Services Producer Price Index (PPI), which fell to 3.0% year-on-year in February. This, in conjunction with the overall positive tone in equity markets, undermined the safe-haven yen and led to the USD/JPY pair rising above the psychological 150.00 mark during the last hour. However, a significant decline in the yen seems unlikely, as expectations of strong wage growth supporting consumption and spreading to broader inflationary trends allow the Bank of Japan (BoJ) to continue raising interest rates.

The minutes of the BoJ's January meeting, released on Tuesday, confirmed a hawkish outlook, with policymakers discussing the pace of interest rate hikes. This marks a notable divergence from the Federal Reserve's (Fed) forecast of two 25 basis point rate cuts in 2025. Consequently, the narrowing rate differential between Japan and the US should provide a tailwind for the low-yielding Japanese Yen, which, along with subdued US Dollar (USD) price action, will drive the USD/JPY pair lower. Traders may also prefer to wait for the release of the Tokyo Consumer Price Index and US Personal Consumption Expenditure (PCE) on Friday.

Trade recommendation: BUY 150.90, SL 150.20, TP 152.15

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