Japanese Yen bulls remain on sidelinesThe negative Purchasing Managers' Index (PMI) report from Japan earlier this Monday has kept the Japanese yen (JPY) down throughout the Asian session. Meanwhile, the safe-haven JPY is being undermined by rumors that US President Donald Trump's reciprocal tariffs will be less severe and more limited than previously expected. The USD/JPY pair returns to the crucial level of 150.00 as the USD maintains its recovery gains from a multi-month low.
The Bank of Japan (BoJ) has the room to continue raising interest rates, but the JPY bears are restrained from making aggressive bets by the expectation that robust wage growth will trickle down to wider inflation trends. Concerns about a slowdown brought on by tariffs, on the other hand, have caused investors to factor in the likelihood that the Fed will soon resume its cycle of rate cuts. It is therefore advisable to exercise caution before positioning for a further increase in the USD/JPY pair, as this could cap gains for the USD and support the lower-yielding JPY.
Technically speaking, in order for bulls to maintain short-term control, the USD/JPY pair must break out above a psychological level of 150.00. If this area is broken, the pair may rise to the 151.00 mark on its way to the monthly peak, which is in the 151.30 range.
Conversely, the 149.00 mark will act as a significant support, followed by the 148.60–148.55 support. Should this support be forcefully broken, the USD/JPY pair may be at risk of accelerating its decline towards the swing low from last week, which was located around the 148.22 region on the way to the 148.00 mark. A decline towards the 147.30 zone may be facilitated by some follow-through selling before spot prices ultimately fall to the 146.55–146.50 range.
