• The USD/JPY outlook remains strongly bearish after Trump’s tariffs.
• BoJ and Fed divergence, along with falling US yields, lend more support to the yen.
• Tariffs pose a threat to Japan’s export-driven economy as well, igniting further uncertainty.

The USD/JPY outlook is predominantly bearish as the yen capitalizes on safe-haven appeal due to President Trump’s sweeping trade tariffs. The pair plummeted 1.2%, marking fresh 3-week lows near 147.20 during the early Asian session. With mounting fears of a US recession, investors are fleeing to the JPY, reinforcing its strength against the US dollar.

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Riskier assets saw a broader sell-off after the latest round of Trump’s tariffs. The stocks slipped, and bond yields dipped, creating a demand for conventional safe-haven assets. The US 10Y hit a YTD low at 4.0%, reinforcing the potential for a Fed rate cut.

The ongoing divergence between the Federal Reserve and the Bank of Japan further fueled the JPY rally. While the Fed is widely expected to cut rates, BoJ remains uncertain. Previously, market participants were expecting an aggressive stance from BoJ. However, Japan’s export-driven economy may suffer as a result of recent tariffs. Still, the recent Tokyo consumer inflation figures suggest that the BoJ may retain its hawkish stance.

Despite Trump’s tariffs favoring the US dollar in the long run, the likelihood of a rate cut and the risk of a recession has undermined the Greenback. According to Wells Fargo analysts, monetary easing is expected to be more pronounced in 2025-26, which could keep the dollar defensive.

Key Events for USD/JPY

Looking ahead, traders will primarily focus on the following:

• Weekly jobless claims
• ISM Services PMI

Still, the broader focus remains on trade development and China’s potential reaction.

USD/JPY technical outlook: Sellers looking at 146.55

The USD/JPY 4-hour chart shows a gloomy picture. The price is slipping towards the key support level at 146.55. The pair lies well below the 30-period SMA, posing a risk of a deeper downside. However, the RSI value reaches 30.0, which indicates an oversold zone. Hence, corrective upside can be expected.

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On the upside, the 30-period SMA is one tough nut to crack for the buyers. Meanwhile, a strong resistance level emerges at 151.15. The path of least resistance lies on the downside.

https://www.forexcrunch.com/blog/2025/04/03/usd-jpy-outlook-slumps-to-3-week-low-after-trump-tariffs/