The value of the Japanese Yen (JPY) has decreased significantly during the Asian trading session. This is due to the recent news that a US federal court has blocked President Donald Trump’s proposed “Liberation Day” tariffs, leading to a decrease in demand for safe-haven assets. Another contributing factor to the JPY’s decline is concerns about Japan’s high levels of debt. As a result, the USD/JPY pair reached a two-week high on Thursday, as the US Dollar (USD) strengthened and the Bank of Japan’s (BoJ) plans to potentially raise interest rates in 2025 provided some support for the JPY.
However, the JPY’s losses are being limited by expectations that the US Federal Reserve (Fed) will continue to lower borrowing costs, which differs greatly from the BoJ’s more optimistic outlook. Furthermore, worries about the US government’s worsening fiscal situation are preventing the USD from appreciating too much against the JPY. From a technical standpoint, the USD/JPY pair has reached a strong resistance level near the 50% retracement of its recent downward trend from the peak of the month. Additionally, the Relative Strength Index (RSI) on hourly charts is showing signs of being slightly overbought. On the other hand, indicators on the daily chart have just begun to show upwards movement, indicating a potential continuation of the overall upward trend.
Therefore, any downward corrections below the 145.35 level, which is the 38.2% Fibonacci retracement level, could be seen as an opportunity to buy, as these corrections are expected to be limited near the psychological mark of 145.00. This level is near the 200-period Simple Moving Average (SMA) on the 4-hour chart, and a break below this could negate the short-term positive outlook. On the other hand, bulls in the USD/JPY pair may wait for the price to consistently rise above 146.00 before making new investments. If this happens, prices may continue to rise towards the intermediate barrier of 146.70-146.75, followed by 147.00 and then the next significant barrier around 147.60. A sustained move upwards could even result in the currency pair reaching the monthly high near 148.65.