03.03.202512:56 Forex Analysis & Reviews: USD/JPY: Analysis and Forecast

The Japanese yen continues to hold its ground against the U.S. dollar, supported by hawkish expectations from the Bank of Japan (BoJ). Investors are weighing the possibility of further interest rate hikes, which in turn supports higher yields on Japanese government bonds (JGBs) and strengthens the yen.

Last week, BoJ Governor Kazuo Ueda emphasized that uncertainty surrounding President Donald Trump's tariff plans calls for a cautious approach to monetary policy. This has prevented yen bulls from opening new positions, affecting USD/JPY's movement. Investors seem to be waiting for key U.S. macroeconomic data, including today's ISM Manufacturing PMI, which could provide further direction for the pair.

From a technical perspective, USD/JPY is struggling to recover after testing the 151.00 psychological level. Although daily chart oscillators are attempting to rebound, they remain in negative territory, suggesting a potential downward move. A decline towards the 150.00 support level appears likely, and a further drop below 149.60 could trigger stronger bearish momentum, potentially driving the pair towards 149.00 and lower.

Conversely, a sustained breakout above 151.00 could trigger a short-covering rally, pushing USD/JPY towards intermediate resistance at 151.50 and the key 152.00 level. If momentum continues, the pair could reach the 200-day SMA near 152.40, which would act as a crucial resistance zone for further upside. A break above this level would open the door for additional bullish movement in the pair.