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USD/JPY Extends Winning Streak on Tariff and Inflation Shocks
The USD/JPY pair experienced heightened volatility last week, dropping to a low of 149.326 before soaring to a high of 151.208.
US tariff developments rattled markets, while inflation data raised expectations of a more hawkish Fed stance, driving US dollar demand. However, inflation numbers for Tokyo raised bets on a May Bank of Japan rate hike, triggering a Friday pullback. The pair still ended the week up 0.35% at 149.815.
Looking ahead, the focus turns to Japan’s economy amid mounting global economic uncertainty. Domestic consumption and labor market trends will give insights into the inflation outlook. Meanwhile, Q1 Tankan surveys may reflect sentiment ahead of potential tariff impacts.
USD/JPY Price Action
Despite a three-week winning streak, the USD/JPY remains below the 50-day and the 200-day EMAs, sending bearish price signals.
A break above the 50-day EMA would support a move toward the 200-day EMA. If USD/JPY breaks out from the 200-day EMA, the bulls could target 153 next.
Conversely, a drop below the 149.358 support level could signal a fall toward the March 11 low of 146.537. If USD/JPY breaks below 146.537, 145 will be the next key support level.
The 14-day Relative Strength Index (RSI) at 49.23 suggests a USD/JPY fall to 145 before entering oversold territory (RSI below 30).
