- The USD/JPY price analysis shows escalating trade tensions between China and the US.
- Trump has threatened to impose another 50% tariff on Chinese goods.
- The BoJ might pause to assess incoming data.
The USD/JPY price analysis shows escalating trade tensions between China and the US that is sending traders to the safe-haven yen. Meanwhile, the dollar collapsed on Wednesday as analysts increased the likelihood of a US recession.
–Are you interested to learn more about South African forex brokers? Check our detailed guide-
The turmoil from last week returned to the markets on Wednesday due to a growing conflict between China and the US. Last week, Trump imposed a total of 54% tariffs on China, dimming the outlook for the economy. As a result, China promised counter-tariffs on US imports. In response, the US president has threatened to impose another 50% tariff on Chinese goods. Such an outcome will hurt both China and the US.
A bigger trade war between the two largest economies will likely weaken the global economy. At the same time, experts are increasing the likelihood of a US recession. The developments on Wednesday increased market panic, sending investors to the safe-haven yen. Meanwhile, the greenback dropped.
Elsewhere, Bank of Japan governor Kazuo Ueda said the central bank would continue raising interest rates. However, he noted that this would depend on whether the economy performs. However, given Trump’s tariffs, there is a chance policymakers will pause to assess incoming data.
USD/JPY key events today
- FOMC policy meeting minutes
USD/JPY technical price analysis: Bears gear up for a new low below 145.01
On the technical side, the USD/JPY price has dropped to retest the 145.01 support level. The price trades far below the 30-SMA, showing bears are in the lead. At the same time, the RSI trades near the oversold region, indicating solid bearish momentum.
-If you are interested in forex day trading then have a read of our guide to getting started-
The first time bears met the 145.01 support, they failed to break below. As a result, bulls returned to push the price higher. However, the bullish move was brief and it paused when the price met a solid resistance zone comprising the 30-SMA and the 148.02 level. The zone allowed bears to return and retest the 145.01 support.
A break below this level will make a lower low, continuing the downtrend. On the other hand, if the level holds firm, the price will consolidate before breaking below or bouncing higher.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
