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The Japanese yen is losing ground today. Positive news on U.S.-Canada trade negotiations and reports that Democrats have secured enough votes to prevent a U.S. government shutdown are improving global risk sentiment. Additionally, according to Bloomberg, citing a source familiar with the Bank of Japan's position, uncertainty over potential rate hikes by the BOJ is also weighing on the yen.
Investors still expect the Bank of Japan to raise interest rates, given rising inflationary pressures in Japan and hopes for continued wage growth, which was observed last year. This is the main factor narrowing the interest rate differential between Japan and other countries, helping limit the yen's losses. At the same time, Trump's tariffs are raising concerns about a slowdown in the U.S. economy, which could prompt the Federal Reserve to cut rates in 2025, complicating further U.S. dollar recovery and, consequently, USD/JPY's upward potential.
From a technical perspective, upward movement has already encountered resistance at the psychological level of 149.00, with the next key resistance at 149.20, the weekly high. A sustained breakout beyond this level could trigger a short-covering rally toward the 150.00 mark. Momentum could extend further, pushing the pair toward 150.55, and potentially 151.00, with the monthly high at 151.30 as the ultimate target.
On the other hand, support is now at 147.70. A decisive break below this level could accelerate declines toward 147.00, extending losses to the 146.55-146.50 zone. Given that oscillators on the daily chart remain in negative territory, further selling pressure could trigger bearish momentum, leading to additional losses for USD/JPY.
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