Created
: 2025.04.01
2025.04.01 11:20
The Japanese Yen (JPY) edges higher against its American counterpart during the Asian session on Tuesday and for now, seems to have stalled the previous day's retracement slide from over a one-week high. The Bank of Japan's (BoJ) Tankan survey showed that Japanese enterprises raised their inflation forecasts for one year, three years, and five years ahead. This, in turn, backs the case for more rate increases from the BoJ and turns out to be a key factor supporting the JPY. Moreover, a modest US Dollar (USD) downtick keeps the USD/JPY pair depressed below the 150.00 psychological mark.
The JPY bulls, however, lack conviction amid a positive turnaround in the global risk sentiment, which tends to undermine the safe-haven currency. Apart from this, receding expectations that the BoJ would raise the policy rate at a faster pace, amid worries about an economic slowdown on the back of US tariffs, act as a headwind for the JPY. Nevertheless, the BoJ's hawkish outlook still marks a big divergence in comparison to bets that the Federal Reserve (Fed) will resume its rate-cutting cycle soon. This, in turn, suggests that the path of least resistance for the lower-yielding JPY remains to the upside.
From a technical perspective, the overnight breakdown below the lower end of a multi-week-old ascending trend channel was seen as a key trigger for the USD/JPY bears. However, neutral oscillators on the daily chart and the overnight resilience below the 100-period Simple Moving Average (SMA) on the daily chart warrant caution before positioning for further losses. Hence, any subsequent slide could find some support near the 149.00 mark ahead of the overnight swing low, around the 148.70 area. Some follow-through selling will reaffirm the negative bias and make spot prices vulnerable to resuming a well-established downtrend witnessed over the past three months or so.
On the flip side, momentum beyond the previous day's peak, around the 150.25 area, could lift the USD/JPY pair beyond the 150.75-150.80 hurdle and allow bulls to reclaim the 151.00 mark. This is followed by the March monthly swing high, around the 151.30 region and a technically significant 200-day SMA, currently pegged near the 151.60 zone. A sustained strength beyond the latter might shift the bias in favor of bulls and lift the pair to the 152.00 mark en route to the 152.45-152.50 region and the 100-day SMA, around the 153.00 round figure.
Tankan major production growth forecast published by Bank of Japan is the forecast of growth in the Manufacturing sector in the next quarter. It is considered an indicator of future business expectations. A high index is considered positive (or bullish) for JPY, while a low index is seen as negative (or bearish) for JPY.
Read more.Last release: Mon Mar 31, 2025 23:50
Frequency: Quarterly
Actual: 12
Consensus: 9
Previous: 13
Source: Bank of Japan
Created
: 2025.04.01
Last updated
: 2025.04.01
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