USD/JPY: 200-day moving average becomes rebound target
2025-03-17
■ Concerns about the slowdown in the US economy have intensified, and the market has begun to digest the expectation of at least two Fed rate cuts this year
■ USD/JPY technical indicators show oversold signals, and may test the rebound strength with the 200-day moving average as the target
USD/JPY has been depreciating the US dollar and appreciating the yen since March. On the 11th, USD/JPY fell to the mid-146 yen, a new low since October 4 last year. Although the Federal Reserve (FOMC) is likely to keep the policy rate unchanged at its meeting on March 18-19, the Trump administration's tariff measures and federal spending cuts (including large-scale layoffs of government employees) have exacerbated market concerns about the slowdown in the US economy. The market expects that the Fed may resume rate cuts as early as May, and the probability of a 25-basis point rate cut at the June meeting is close to 80%. By the end of 2025, the market has factored in the expectation of three cumulative rate cuts, totaling 75 basis points.
The Bank of Japan (BOJ) is also expected to keep the policy rate unchanged at its monetary policy meeting on March 18-19. Against the backdrop of rising global economic uncertainty, the BoJ remains wary of upward inflationary pressure. The first round of statistics for the spring labor-management negotiations (Shunto Spring Wage Negotiation) released today by the National Trade Unions of Japan (Confederation) may affect market expectations for additional rate hikes at the April 30-May 1 meeting. In his speech on the 5th, Shinichi Uchida, deputy governor of the BoJ, said that the pace of rate hikes would not be followed at every meeting, and stressed that the "core inflation rate" would be observed at the same time before making a judgment. At present, the short-term financial market expects the probability of the BoJ raising interest rates in June to be slightly less than 50%, and the probability of raising interest rates in July to be close to 60%.
After hitting a low of 103.221 on the 11th, the US dollar index rebounded slightly for two consecutive trading days. The "expectation index" in the University of Michigan Consumer Confidence Index for March, which will be released in the United States, is expected to rise, while the February retail sales data released on the 17th is expected to increase month-on-month. These factors may support the trend of the US dollar. Although the expectation of narrowing interest rate differential between Japan and the United States may cause the trend of dollar depreciation and yen appreciation to continue, from a technical perspective, USD/JPY has shown oversold signals in the short term and may test the strength of the rebound with the 200-day moving average (152.05 yen as of the 13th) as the upper target.
■ USD/JPY technical indicators show oversold signals, and may test the rebound strength with the 200-day moving average as the target
USD/JPY has been depreciating the US dollar and appreciating the yen since March. On the 11th, USD/JPY fell to the mid-146 yen, a new low since October 4 last year. Although the Federal Reserve (FOMC) is likely to keep the policy rate unchanged at its meeting on March 18-19, the Trump administration's tariff measures and federal spending cuts (including large-scale layoffs of government employees) have exacerbated market concerns about the slowdown in the US economy. The market expects that the Fed may resume rate cuts as early as May, and the probability of a 25-basis point rate cut at the June meeting is close to 80%. By the end of 2025, the market has factored in the expectation of three cumulative rate cuts, totaling 75 basis points.
The Bank of Japan (BOJ) is also expected to keep the policy rate unchanged at its monetary policy meeting on March 18-19. Against the backdrop of rising global economic uncertainty, the BoJ remains wary of upward inflationary pressure. The first round of statistics for the spring labor-management negotiations (Shunto Spring Wage Negotiation) released today by the National Trade Unions of Japan (Confederation) may affect market expectations for additional rate hikes at the April 30-May 1 meeting. In his speech on the 5th, Shinichi Uchida, deputy governor of the BoJ, said that the pace of rate hikes would not be followed at every meeting, and stressed that the "core inflation rate" would be observed at the same time before making a judgment. At present, the short-term financial market expects the probability of the BoJ raising interest rates in June to be slightly less than 50%, and the probability of raising interest rates in July to be close to 60%.
After hitting a low of 103.221 on the 11th, the US dollar index rebounded slightly for two consecutive trading days. The "expectation index" in the University of Michigan Consumer Confidence Index for March, which will be released in the United States, is expected to rise, while the February retail sales data released on the 17th is expected to increase month-on-month. These factors may support the trend of the US dollar. Although the expectation of narrowing interest rate differential between Japan and the United States may cause the trend of dollar depreciation and yen appreciation to continue, from a technical perspective, USD/JPY has shown oversold signals in the short term and may test the strength of the rebound with the 200-day moving average (152.05 yen as of the 13th) as the upper target.