USD/JPY Targets After Falling to a 5-Month Low

03/04/2025

Market Overview

The US Dollar weakened broadly on Thursday as investors flocked to safe-haven assets following the imposition of tougher-than-expected tariffs on the United States’ trading partners. This development spurred a rush towards the Japanese Yen and the Swiss Franc, with the Yen reaching a three-week high against the Dollar. Market sentiment reflects heightened caution as traders digest the implications of the new tariffs.

Amid this backdrop, USD/JPY continues to experience downside pressure, influenced by the shift in risk appetite. Market participants are also closely watching developments in ongoing trade negotiations, which may further impact sentiment in the near term.

Technical Analysis

On the daily chart, USD/JPY has extended its downtrend, reaching its lowest level in five months. Sellers have intensified pressure, pushing the pair below the key support at 146.535, marking the continuation of the three-month bearish trend. If selling momentum persists and the pair breaks through this critical support, the next downside targets are at 145.265, 143.650, and 141.867.

Momentum indicators support the bearish bias. The RSI remains in the oversold region, signaling ongoing selling pressure, while the MACD histogram shows continued expansion in negative territory. Additionally, moving averages point downward, reinforcing the prevailing downtrend. Should buyers regain control, they must reclaim resistance at 148.318 to neutralize the immediate bearish outlook.

Key Technical Levels

Resistances: 148.318, 151.203
Supports: 146.265, 143.650, 141.867

Fundamental Drivers

Traders are eyeing the upcoming US PMI reports, which are expected to show improvements in the services sector compared to the previous period. While the non-manufacturing PMI is projected to remain above 50, it might slightly decline from the previous reading. This mixed outlook could generate volatility for USD pairs, particularly if the data deviates from expectations. Moreover, ongoing trade tensions add an extra layer of uncertainty, keeping investors cautious.