USD/JPY Eyes October Low as China Responds to Trump Tariffs
USD/JPY falls to a fresh yearly low (144.00) as China imposes an additional 50% tariffs on the US.
Share this:
US Dollar Outlook: USD/JPY
USD/JPY falls to a fresh yearly low (144.00) as China imposes an additional 50% tariffs on the US, and the update to the US Consumer Price Index (CPI) may keep the exchange rate under pressure as the report is anticipated to show slowing inflation.
USD/JPY Eyes October Low as China Responds to Trump Tariffs
USD/JPY may attempt to test the October low (142.97) as it extends the decline from earlier this week, and the exchange rate may track the negative slope in the 50-Day SMA (150.04) as the threat of a trade war puts pressure on the Federal Reserve to further unwind its restrictive policy.
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
In turn, speculation surrounding US monetary policy may continue to sway the carry trade as Fed officials still forecast lower interest rates for 2024, and the US Dollar may face headwinds ahead of the next Federal Open Market Committee (FOMC) rate decision on May 7 as the shift in trade policy clouds the economic outlook.
US Economic Calendar
In addition, the update to the US CPI may drag on the Greenback as the headline and core reading for inflation are expected to narrow in March, and signs of slowing price growth may encourage the Fed to implement lower interest rates in an effort to prevent a recession.
However, a higher-than-expected CPI print may push the FOMC to further combat inflation, and evidence of sticky price growth may generate a bullish reaction in the Greenback as it curbs speculation for an imminent Fed rate-cut.
With that said, a rebound in USD/JPY may keep the Relative Strength Index (RSI) out of oversold territory, but a move below 30 in the oscillator is likely to be accompanied by a further decline in the exchange rate like the price action from last year.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY extends the decline from earlier this week to register a fresh yearly low (144.00) but need a close below the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region a bring the October low (142.97) on the radar.
- A break/close below the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone opens up the July 2023 low (137.24), with the next area of interest coming in around 134.70 (78.6% Fibonacci extension) to 136.00 (23.6% Fibonacci extension).
- At the same time, lack of momentum to close below the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region may push USD/JPY back towards the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) region, with a breach above the monthly high (150.49) raising the scope for a test of the March high (151.31).
Additional Market Outlooks
Canadian Dollar Forecast: USD/CAD Rebound Fizzles amid Trump Tariff Negotiations
AUD/USD Selloff Persists as US Threatens Additional 50% Tariff for China
Euro Forecast: EUR/USD Completes Cup-and-Handle Formation
GBP/USD Pulls Back to Keep RSI Out of Overbought Zone
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY Analysis: Rising U.S. Yields Leave the Yen on the Defensive
As the first week of November progresses, renewed weakness in the Japanese yen is once again becoming evident in the short term. This dynamic can be seen in the recent performance of USD/JPY, which has posted two consecutive bullish sessions and gained more than 0.7%, reflecting a return of buying interest in the dollar while the yen continues to lose momentum.
Yen Bulls Loaded Up into BOJ as Euro Shorts Hit 11-Year Extreme| COT report
Yen bulls piled into futures ahead of the BOJ's hawkish hold, while euro shorts reached an 11-year extreme despite EUR/USD holding above support.
USD/JPY Weekly Outlook: Oil shock offsets mounting AI concerns
USD/JPY has barely moved despite tumbling US Treasury yields and a sharp selloff in AI stocks. Can elevated energy prices continue to offset the pressure?
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.