The USDJPY rate is approaching its fall lows. However, at the level of 141.5, the bulls' willingness to seize the initiative and make at least a slight upward price rebound is clearly visible. The technical picture also points to oversold conditions and the shaping of growth signals. The short-term wave of the dollar strengthening against the yen may reach 145 before traders are eager to take profits on long positions.
According to the BNY data, institutional investors have started buying the US currency again. Apparently, they are attracted by the dollar falling to its lowest levels in six months. Analysts of State Street Global Markets also note the excessive price growth of other safe haven assets, in particular gold, Japanese yen, and Swiss franc. Liquidity flows may soon turn and head towards the US currency.
A likely pause in the monetary tightening cycle also weighs on the attractiveness of the Japanese currency. The Bank of Japan officials, who have spoken in recent days, almost unanimously stated that interest rates will remain unchanged on May 1. In their opinion, it is now necessary to focus all attention on trade negotiations with the US. Only after an agreement is reached can Japan consider a new increase in the borrowing costs.
In addition, the Japanese regulator may worsen its GDP forecast for 2025 at the next meeting. Reuters sources report that the country's current economic growth estimate of 1.1% looks too optimistic even if a compromise with the US authorities is reached. Although Donald Trump has said that negotiations with Japan are going well, the lack of specifics makes it hard to hope for a quick deal. While this issue is in limbo, the USDJPY rate has a chance to rebound.
RSI and Stochastic indicators have reached the oversold zone, increasing the probability of an upward reversal of the price movement. The level of 145 will be the target for USDJPY buyers.
Consider the following trading strategy:
Buy USDJPY at the current price. Take profit — 145. Stop loss — 141.5.
This content is for informational purposes only and is not intended to be investing advice.
