USD/JPY Analysis: Awaits Fed & BoJ Signals – 17 March 2025

-- Recent signals from the Bank of Japan indicating its readiness for further monetary policy tightening will be met this week by signals from the US Federal Reserve, which could cause strong and influential fluctuations in the USD/JPY currency pair.
-- The pair attempted to recover in recent trading sessions from losses that reached the support level of 146.54, the lowest for the pair in five months.
-- However, the upward rebound gains did not exceed the resistance level of 149.05, and it will begin trading this important week stable around 148.62 amidst attempts by both bears and bulls to take control.

Recently, US tariffs have rattled markets, in response to Trump's threats. The United States imposed new global tariffs of 25% on steel and aluminium, without any exemptions, adding to the existing 20% ​​tariffs on Chinese goods. This comes 22 days before the US begins its broader experiment in counter-trade policy, "reciprocal tariffs."

As expected, retaliatory tariffs have begun to pile up, first from Canada, soon from Europe, and then from China. Numerous additional tariffs are likely to be imposed in April and the months to come. The Peterson Institute estimates that US households will spend approximately $1,000 more annually due to the latest tariffs, and this amount will increase significantly after the April 2 round begins.

US President Trump told reporters last week that there would be no exemptions from the April 2 round of tariffs once they are imposed, suggesting that negotiations are expected beforehand. US administration officials have indicated in various ways that some "disruption" or, according to Treasury Secretary Besant, "a period of recovery" lies ahead, with rising prices and market volatility. However, they say it will be worth it in the indefinite long term, as businesses relocate to the United States, employment increases, and manufacturing grows. They point out that their goal is to shift the economy from a government-led to a private-sector-led economy.

However, reading the US Consumer Price Index (CPI) report, which showed lower inflation pressures than expected in February, is somewhat irrelevant regarding tariffs, as they are a common phenomenon in March. The CPI result gave US stocks an initial boost, but it was quickly overshadowed by other factors.

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Trading Tips:

The dollar against the Japanese yen remains on a downward trajectory as long as it remains below 150.00. Beware of the events of this important week.

Despite Pressure, US Stocks Close Higher

By the end of last week's trading, US stock market indices concluded a difficult week with a notable rise, with the S&P 500 index jumping 2.1%, the Dow Jones by 674 points, and the Nasdaq 100 by 2.5%. In general, the easing of fears of a government shutdown and investor resilience in the face of weak US consumer confidence data contributed to the market rise. Recently, Senate Minority Leader Chuck Schumer indicated his support for a Republican-backed funding bill, reducing political uncertainty. However, the University of Michigan's US consumer confidence index fell to 57.9 points, its lowest level since November 2022, reflecting concerns about inflation and tariffs.

Tech stocks led the recovery, with Nvidia shares rising 5.3%, while Tesla, Meta, Amazon, and Apple shares rose more than 1%. Palantir shares also jumped 8.3%, defying concerns about a potential cut in defence spending.

Despite Friday's gains, the S&P 500 and Nasdaq fell more than 2% each for the week, while the Dow Jones Industrial Average fell 3.1%—its worst weekly performance since March 2023.

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USD/JPY Technical Analysis and Expectations Today:

According to daily chart trading, the general trend for the USD/JPY currency pair remains downward. As we mentioned before, moving below 150.00 will continue to support the bears in moving towards stronger support levels, the closest of which are currently 147.70, 146.90, and 145.00, respectively, and will be sufficient to push technical indicators towards strong oversold levels. In contrast, and on the same time frame, a break of the current downward trend will occur if the bulls succeed in pushing the USD/JPY pair towards the resistance levels of 150.50 and 151.40, respectively.

Ultimately, the USD/JPY pair will continue to trade within narrow ranges around its current trajectory until markets and investors react to the US Federal Reserve's announcement and determine whether investors are willing to take risks.

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Original Source DailyForex.com provides daily fundamental and technical analysis and signals for those looking to trade based on trends in the currency markets.