The USDJPY currency pair dropped sharply today, April 21, right after the opening of the Asian trading session due to the strengthening of the yen against the US dollar. The pair broke through the 141.000 support level and stopped falling just under 250 pips below it. The price reached it at the very beginning of 2024 and again in September 2024, when it bounced back and reversed to the upside. There is a high probability that a similar reversal will occur again in the coming days. At the time of writing, the asset’s decline has slowed, and it is attempting to return to the 141.000 level, supporting this likelihood.
The Relative Strength Index (RSI) on the hourly timeframe has entered the oversold zone. The 4-hour RSI shows a value of 31, while the daily RSI is at 26, indicating a decrease in selling momentum and a potential change in trend direction soon.
Global economic advisory firm Oxford Economics lowered its forecasts for Japan's Gross Domestic Product (GDP) by 0.2 percentage points to 0.8% in 2025 and by 0.4 percentage points to 0.2% in 2026 due to disruptions in global trade. This change in projections is based on the assumption that the US customs duty rate on Japanese goods will remain at 16%, up from 2% at the end of 2024.
Norihiro Yamaguchi, a senior economist at Oxford Economics, believes that the Bank of Japan will become much more cautious about raising interest rates and is likely to keep them unchanged in 2025 and 2026. This caution is due to weak economic growth prospects and high uncertainty regarding trade policy.
The following trading strategy may be suggested: buying at the current price with Take Profit at 142,100 and Stop Loss at 139,600.
This content is for informational purposes only and is not intended to be investing advice.
