JPY/USD Declines: Temporary Pause Amid Strong Long-Term Outlook
Andrey Goilov | Mar 12, 2025 05:58AM ET
USD/JPY climbed to 148.19 on Wednesday, marking its second consecutive session of gains after touching a low of 146.53, its weakest level since 4 October 2024. While this movement partly resembles a technical rebound, broader market conditions appear to shift, influencing the yen’s trajectory.
Key Factors Affecting USD/JPY
Bank of Japan (BoJ) Governor Kazuo Ueda stated that it is natural for bond yields to reflect market expectations regarding short-term interest rates. He downplayed the significance of any divergence between the BoJ’s stance and market sentiment.
Despite this, financial markets continue to bet on the BoJ sticking to its interest rate hike strategy for 2025. Japan’s latest inflation data further strengthens this view.
The Consumer Price Index (CPI) for January 2025 surged to 4.0%, the highest since January 2023. The primary driver was food prices, which spiked 7.8% y/y, while rising electricity and gas prices also contributed to overall inflation. Meanwhile, core inflation hit a 19-month high at 3.2%.
Given this inflationary environment, the BoJ remains pressured to maintain its tightening cycle, a strong supporting factor for the yen over the longer term.
Technical Analysis of USD/JPY
On the H4 chart, USD/JPY is developing a growth wave targeting 148.38. After reaching this level, a correction towards 147.34 may follow, outlining the consolidation range at the recent lows. If the price breaks upwards, the pair could extend gains towards 150.20, the next key resistance level. A correction to 148.38 could then occur. The MACD indicator supports this outlook, with its signal line below zero but pointing strictly upwards, indicating bullish momentum.
On the H1 chart, the pair is forming a growth wave towards 148.38, marking the first key target. A potential pullback to 147.34 may follow before a renewed push higher towards 149.40, the next local target. The Stochastic oscillator confirms this scenario, with its signal line above 50 and trending upwards, suggesting continued buying pressure.
Conclusion
Get The News You Want
USD/JPY is experiencing a short-term rebound, with market sentiment driving the pair higher amid shifting rate expectations. However, the BoJ’s stance and Japan’s strong inflation figures provide longer-term support for the yen, keeping the broader outlook mixed.
In the near term, 148.38 remains a key resistance level, with the potential for further gains towards 150.20 if bullish momentum persists. A corrective pullback to 147.34 could provide a buying opportunity before the next upward wave towards 149.40. Market participants will closely watch economic developments and BoJ policy signals to determine the yen’s next move.
By RoboForex Analytical Department
Disclaimer
Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.