Key Points:
- USD/JPY remains around 149.7, holding steady amid rate hike expectations from the Bank of Japan.
- Safe-haven demand supports the yen as cross-border and trade tensions rise.
- Markets await key Japanese industrial production, retail sales, and inflation data due Friday.
The Japanese yen traded near 149.7 per dollar on Tuesday, maintaining its strongest position in 12 weeks as traders reacted to growing expectations of further monetary tightening from the Bank of Japan (BoJ). Recent upside surprises in Japan’s Q4 inflation have fueled speculation that the central bank will continue raising interest rates this year.
Market participants are closely monitoring upcoming reports on industrial production, retail sales, and Tokyo’s inflation for further clues on Japan’s economic trajectory. These indicators will likely shape expectations for the BoJ’s next policy move, with some analysts suggesting the central bank could consider another rate hike if inflation remains persistent.
The BoJ has remained cautious about exiting its ultra-loose policy, but pressure is mounting as price growth proves stickier than expected. Any further hawkish signals from policymakers could strengthen the yen, pushing USD/JPY lower towards the 148.5 level.
Trade and Political Uncertainty Adds to Yen’s Appeal
The yen has also found support from safe-haven demand as global trade tensions escalate. On Monday, U.S. President Donald Trump reaffirmed plans to impose tariffs on Canada and Mexico, further disrupting trade flows and raising concerns about economic stability.
Additionally, negotiations surrounding Ukraine and Russia have added another layer of uncertainty, prompting traders to shift towards traditional safe-haven assets, including the Japanese yen and gold.
Technical Outlook
USD/JPY has seen choppy price action around 149.70, with a recent high near 150.30 and a swing low around 148.85. The short-term moving averages (5, 10, 30) show mixed signals, with the price dipping below them briefly before regaining ground, indicating no clear directional bias.
Picture: USD/JPY stabilises near 149.75, watching 150.30 for resistance, as seen on the VT Markets app
Meanwhile, the MACD is hovering near the zero line, suggesting that bullish and bearish momentum are roughly balanced. A break above 150.30 could spark renewed buying toward higher levels, while a move below 148.85 might trigger a deeper pullback.
Traders remain cautious, waiting for fresh economic cues to confirm the next directional move. If Japanese economic data exceeds expectations, it could strengthen the yen further, pushing USD/JPY below 149. However, a weaker-than-expected report could open the door for a return towards 150.50.
For now, USD/JPY remains in a tight range, with traders looking ahead to Friday’s data for a clearer policy direction.
