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USDJPY:
On Thursday, during the Asian session, the Japanese yen (JPY) strengthened against its US counterpart, recouping most of the previous day’s losses. This follows a decline in global risk sentiment in response to new tariffs on imported cars introduced by US President Donald Trump. This follows Trump’s imminent announcement of retaliatory tariffs next week, which supports the yen as a safe-haven currency. Additionally, the Bank of Japan’s (BoJ) hawkish policy outlook, supported by sustained strong wage growth, further strengthens the yen.
In contrast, the Federal Reserve’s (Fed) forecast for two 25-basis point rate cuts in 2025 is significantly different from the BoJ’s expectations. This divergence could potentially result in a narrowing of the rate differential between the US and Japan, thereby driving flows towards a lower-yielding yen. In addition, a moderate pullback in the US dollar from a three-week high is pushing the USD/JPY pair closer to the psychological 150.00 mark. Traders are now awaiting the release of US macroeconomic data, including final Q4 GDP data, weekly initial jobless claims and pending home sales, to build momentum.
Trade recommendation: BUY 150.45, SL 149.90, TP 151.25
Origin: FreshForex
