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Buyers Could Step In to Defend Key Support Levels
Economic
Forex
Summary:
If buyers reemerge around this zone, we could see a fresh bullish reversal, with potential for a move toward the 150.52 area
Buy
TradingUSDJPY
EXP
142.280
Entry Price
150.520
TP
139.500
SL
142.990 +0.648 +0.46%
0
Point
Flat
139.500
SL
CLOSING
142.280
Entry Price
150.520
TP
Over the weekend, U.S. Treasury Secretary Scott Bessent stated that trade agreement negotiations with several Asian countries are actively underway. Additionally, U.S. Secretary of Agriculture Brooke Rollins commented that the Trump administration is engaging in “daily conversations” with China regarding tariffs.
However, China responded on Monday, clarifying that it is currently not involved in any active trade negotiations with the United States. Chinese officials reiterated their stance that no side wins in a tariff war and emphasized that discussions should be conducted on the basis of mutual respect.
On the data front, the University of Michigan’s consumer sentiment report, released last Friday, showed a slight improvement compared to the preliminary figures, likely reflecting the temporary pause in tariff escalations by President Trump. Nonetheless, the report highlighted ongoing weaknesses, with a notable deterioration in both current conditions and future expectations. Particularly concerning was the sharp rise in inflation expectations: the 1-year inflation outlook surged to 6.5% in April, up from 5.0% in March, and has nearly doubled since January. Policymakers are expected to take careful note of this trend, as it increasingly signals broad-based inflation fears rather than merely partisan divides.
Meanwhile, the optimism that U.S. trade policies could ultimately lead to a reduction in global tariffs appears to be fading. Analysts at Standard Chartered noted that multilateralism continues to erode under the Trump administration, with the World Trade Organization (WTO) sidelined and free trade agreements facing prolonged and uncertain negotiations. Adding to the downside risks, the persistence of trade uncertainty is increasingly seen as a threat to global growth prospects.
There are no scheduled Federal Reserve speakers this week, as the institution has entered its blackout period ahead of the Federal Open Market Committee (FOMC) meeting and rate decision set for May 7.
According to the CME FedWatch Tool, the probability of a rate cut at the upcoming May FOMC meeting stands at just 8.9%, with a 91.1% likelihood of no change. However, for the June meeting, market pricing suggests a roughly 61.9% chance of a rate cut, indicating growing expectations for policy easing as the year progresses.
Attention is also turning toward the Bank of Japan’s (BoJ) meeting this Friday, which carries notable significance. Although an immediate rate hike is not expected, stronger-than-anticipated inflation readings and broader disruptions to global trade could shape the BoJ’s future policy guidance. Expectations for a rate increase have now been pushed toward later in the year, with market participants eyeing a potential window between September and December.
Technical Analysis
USD/JPY has extended its decline from the high of 144.05 reached on April 25, dropping to a session low of 141.98. The pair is now approaching key support at 141.74—a level that previously marked the beginning of a significant upward movement. If buyers reemerge around this zone, we could see a fresh bullish reversal, with potential for a move toward the 150.52 area. On the downside, the next major support lies at 139.64, a level not seen since July 2023, which could encourage buyers to step in as the pair tests a new multi-month low.
Meanwhile, the 100- and 200-period moving averages are positioned at 151.15 and 149.94, respectively, providing ample room for a recovery should bullish momentum build. These moving averages align closely with the 0.50–0.618 Fibonacci retracement zone, adding further confluence to the upside targets.
The RSI currently stands at 39, slightly tilted downward but still well above oversold territory. Should the 141.74 support fail to hold and a strong downside break occur, a further decline toward the 139.64 support could be on the horizon.
Trading Recommendations
Trading direction: Buy
Entry price: 142.12
Target price: 150.52
Stop loss: 139.50
Validity: May 08, 2025 15:00:00
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