18.03.202519:21 Forex Analysis & Reviews: USD/JPY. Analysis and Forecast

Today, the Japanese yen continues to decline intraday, pushing USD/JPY close to the key psychological level of 150.00, with the pair setting a new two-day high around 149.87.

Global market sentiment remains optimistic, supported by China's stimulus measures and hopes for a peace agreement in Ukraine, reducing demand for safe-haven assets like the yen.

Ahead of the Ukraine peace talks between U.S. President Donald Trump and Russian President Vladimir Putin, Trump's optimism about a possible ceasefire and agreement is lifting market sentiment. This, combined with China's plan to stimulate domestic consumption, announced over the weekend, is creating a favorable investment climate.

Markets are actively pricing in the possibility that the Bank of Japan (BoJ) will continue raising interest rates this year. The positive outcomes of Japan's spring wage negotiations (Shunto), along with concerns over Trump's trade tariffs, may limit further losses for the yen.

Japan's Finance Minister Katsunobu Kato, in his latest press conference, stated that bond markets should determine yield movements, signaling a more market-driven approach to policy regulation. This statement comes amid a recent surge in 40-year Japanese government bond yields to record highs.

Regarding Japan's spring labor talks, results indicate that companies are willing to significantly raise wages, potentially stimulating consumer spending and inflation growth. This, in turn, could allow the BoJ to continue its rate hikes, which would support the yen in the long term.

Additionally, expectations of further Federal Reserve policy easing, including the possibility of a 25-basis-point rate cut, are growing. These expectations stem from concerns about a U.S. economic slowdown, driven by tariffs, a cooling labor market, and lower inflation. Such expectations could limit the U.S. dollar's recovery, which has already hit its lowest level since October 2024. As a result, further USD/JPY upside may be limited.

Technical Outlook

From a technical perspective, a break above the 100-period simple moving average (SMA) on the 4-hour chart, which occurred during the Asian session, and a sustained move above 149.00 serve as key bullish signals. Oscillators on the 4-hour chart are displaying positive momentum, supporting the potential for additional gains, though they are approaching overbought territory. A return to the psychological level of 150.00 appears likely, but further upside could face strong resistance near 150.75–150.80, where the 200-period SMA is located.

On the other hand, support levels at 149.20, 149.00, and 148.80—coinciding with the 200-period SMA on the 4-hour chart—are now key areas preventing an immediate drop. A convincing break below these levels would indicate that the recent bullish momentum has faded, potentially dragging USD/JPY down to support at 148.20, followed by 148.00. A deeper pullback could extend toward 147.40 and 147.00, before testing the multi-month low at 146.50, last reached on March 11.