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06.05.2025 06:47 PM
USD/JPY. Analysis and Forecast

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The Japanese yen is attracting buyers following a recent decline, owing to its status as a safe-haven asset in times of uncertainty. The anticipated recovery of the yen is supported by both domestic and external factors.

Despite dovish signals from the Bank of Japan last Thursday, rising inflation in Japan and the outlook for sustained wage growth are laying the groundwork for potential monetary tightening by the central bank.

In addition, uncertainty surrounding U.S. President Donald Trump's trade policy and escalating geopolitical tensions are boosting demand for safe-haven assets such as the Japanese yen. This continues to support demand for the Far Eastern currency.

On the other side of the pair, the U.S. dollar is struggling to attract significant buying interest, as traders await further signals regarding the Federal Reserve's interest rate reduction path. As such, market participants should closely monitor the two-day FOMC meeting that begins today and concludes tomorrow during the North American session. This meeting of the Federal Open Market Committee (FOMC) is a key event that could have a substantial impact on the market.

From a technical standpoint, the USD/JPY pair struggled last week to break above the 200-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent decline and negative oscillator readings on the daily, 4-hour, and 1-hour charts suggest that the path of least resistance for spot prices is to the downside. Therefore, any recovery attempts above the 144.00 round level can be viewed as a selling opportunity near the supply zone of 144.25–144.30. However, sustained strength beyond this zone could trigger a short-covering rally, allowing spot prices to return to the psychological level of 145.00.

On the other hand, weakness below the 143.00 round level would drag the pair toward support at 142.50. A decisive break of this level would expose the 142.00 round number. If the pair fails to hold this level, the next stop would likely be in the 141.60 level, with the potential to drop further toward the next psychological level at 141.00.

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Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
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