- The USD/JPY weekly forecast indicates improving risk appetite.
- The US said it was ready to lower tariffs on China to 50% and start negotiations.
- Market participants will focus on the Bank of Japan policy meeting.
The USD/JPY weekly forecast is bullish as improving risk appetite weighs on the safe-haven yen, pushing the pair higher.
Ups and downs of USD/JPY
The USD/JPY pair had a bullish week as the dollar rebounded and the yen lost its safe-haven appeal. The greenback recovered as calm returned to most US markets. Trump halted his earlier attacks on the Fed, restoring faith in the central bank’s independence.
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At the same time, trade tensions between China and the US eased. The US said it was ready to lower tariffs on China to 50% and start negotiations. Meanwhile, China was prepared to exempt some US goods from tariffs. As a result, recession concerns eased, boosting the dollar. At the same time, risk appetite improved, hurting the safe-haven yen.
Next week’s key events for USD/JPY
Next week, the US will release crucial figures on economic growth, business activity, and employment. Moreover, market participants will focus on the Bank of Japan policy meeting.
Traders will focus on the US monthly employment report for signs of deterioration in the US economy. Experts believe Trump’s tariffs have hurt the US economy. Meanwhile, Fed policymakers are waiting for evidence of this. Therefore, a downbeat report will increase Fed rate cut expectations, pushing USD/JPY lower.
Meanwhile, economists expect the Bank of Japan to keep interest rates unchanged on Thursday.
USD/JPY weekly technical forecast: Bulls approach the 30-SMA resistance
On the technical side, the USD/JPY price has rebounded after reaching the 140.01 support level. However, it still trades below the 22-SMA, indicating that bears remain in the lead. At the same time, the RSI is under 50, suggesting solid bearish momentum.
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Bears have maintained the downward trajectory since they took charge near the 158.05 key level. The price has mostly traded below the 22-SMA and the RSI below 50. Moreover, USD/JPY has consistently made lower highs and lows. If this trend continues, the price will respect the SMA as resistance and bounce lower.
Even if it punctures the SMA, it will not go beyond the bearish trendline. A break below the 140.01 support will strengthen the bearish bias and continue the downtrend. Meanwhile, the trend can only change if the price breaks above the SMA and the resistance trendline.
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