USD/JPY Price forecast: Struggles at 148.00, drops on risk aversion

USD/JPY starts Friday steady near 147.90 following Thursday’s 0.30% drop, pressured by unresolved US trade tensions.
Pair fails to capitalize on recent bullish ‘tweezers bottom’ pattern near YTD lows, remaining vulnerable below key Tenkan-sen resistance.
Break below immediate support at 146.54 could spark deeper selling; reclaiming 148.00 may pave way toward 149.79 resistance.

The USD/JPY begins Frida’s Asian session on a higher note, following Thursday’s losses of 0.305, that pushed the exchange rate to close at 147.81 daily. At the time of writing, the pair trades at 147.91, virtually unchanged, as traders continued to digest US President Donald Trump's tariff rhetoric.

USD/JPY Price Forecast: Technical outlook

Even though the USD/JPY formed a ‘tweezers bottom’ two candle chart pattern near the year-to-date (YTD) low of 146.54, two days ago, the pair failed to decisively clear the Tenkan-sen at 148.97, which opened the door for a retracement.

Consequently, the USD/JPY fell beneath 148.00 and continued to drop, aligned with the overall market. If the pair falls below the latter, the next support would be the March 11 swing low of 146.54.

Conversely, if USD/JPY climbs above 148.00 a rally towards testing the Senkou Span A at 149.79 is on the cards.

USDJPY Price Chart: Technical outlook

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.