USD/JPY hits two-month low as demand for safe-haven yen surges

Key factors behind JPY strength

The yen's rise is largely due to growing global risk aversion. Earlier this week, US President Donald Trump announced plans to impose 25% tariffs on cars, semiconductors, and pharmaceuticals, sparking fresh concerns about a global trade war.

Additionally, the market is reacting to Trump's foreign policy statements, particularly regarding the Russia-Ukraine conflict, which has further intensified the demand for safe-haven assets, including the yen.

Domestically, the Bank of Japan (BoJ) is expected to raise interest rates this year, providing fundamental support for the yen. However, uncertainty remains as to whether the BoJ will act in March or delay its decision.

Investors are now awaiting inflation data from Japan, which could provide more clarity on the central bank’s next move.

USD/JPY technical analysis

On the H4 chart, USD/JPY has reached its local downside target at 150.22. A consolidation range is expected to form at these lows. If the pair breaks upwards from this range, a corrective move towards 153.45 could begin. However, after completing this correction, a fifth wave of decline may develop, targeting 148.11. The MACD indicator confirms this outlook, with its signal line positioned below zero and pointing strongly downward, indicating bearish momentum.

On the H1 chart, USD/JPY completed a downward wave to 150.22 and is currently consolidating above this level. If the price breaks upwards, the first corrective wave could extend to 151.82. After reaching this level, a potential pullback to 150.98 may follow before the broader trend resumes. The Stochastic oscillator also supports this view, with its signal line below 20, preparing for a move towards 80, suggesting a short-term correction before further downside.

Conclusion

The Japanese yen continues to benefit from heightened global trade and geopolitical risks, along with expectations of further BoJ tightening. While a short-term correction towards 151.82 is possible, the overall trend remains bearish, with downside targets at 150.22 and potentially 148.11. Market focus will remain on Japan’s inflation data and further developments in US trade policy, both of which could shape the yen’s next major move.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.