• The USD/JPY price analysis shows strength in the yen after Ueda’s comments.

• The BoJ will hike rates if the economy re-accelerates.

• Data revealed soft business activity in the US manufacturing sector.  

The USD/JPY price analysis shows strength in the yen after BoJ’s Ueda said the central bank would hike rates if growth re-accelerates. At the same time, the yen strengthened as safe-haven demand rose on renewed trade tensions between the US and its trading partners.

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Bank of Japan Governor Kazuo Ueda said on Tuesday that the central bank would hike rates if the economy re-accelerated. He also noted that wage growth must re-accelerate. At the moment, Trump tariffs have dimmed the outlook for the economy. Therefore, it might not be the best time to hike interest rates. However, if the economy rebounds after a brief pullback, policymakers will be ready to hike. This news boosted the yen.

Furthermore, the yen continued its rally as safe-haven demand rebounded on trade tensions. Trump promised to double tariffs on steel and aluminum imports. The move will likely increase trade tensions between the US and its partners, like Canada and the Eurozone. Moreover, it revealed that Trump was going on with his tariff campaign. Therefore, the risk of a global trade war remains. 

Elsewhere, the dollar eased after data revealed soft business activity in the US manufacturing sector. The ISM PMI came in at 48.5, below estimates of 49.3. The decline showed the effects of Trump’s tariffs on the US economy. Traders will now wait to see employment figures.

USD/JPY key events today

USD/JPY technical price analysis: Bears challenge the 142.55 support

On the technical side, the USD/JPY price is testing a major support at the 142.55 level. It trades below the 30-SMA with the RSI under 50, suggesting a bearish bias. The price recently reversed to the downside when it broke and stayed below the 30-SMA. 

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Furthermore, although there was a strong rebound at the 142.55 level, it only made a lower high. This is a sign that bulls could not sustain a move above the 30-SMA. As a result, bears returned to push USD/JPY below the SMA. 

At the moment, the price is challenging the 142.55 support. A break below this level will make a lower low, confirming a continuation of the downtrend. Moreover, such a move would allow bears to target the 140.01 support level.

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EUR/USD Analysis Summary Today

• Overall Trend: Upward.
• Today’s Euro-Dollar Support Levels: 1.1360 – 1.1290 – 1.1180.
• Today’s Euro-Dollar Resistance Levels: 1.1485 – 1.1560 – 1.1630.

EUR/USD Trading Signals:

• Buy Euro-Dollar from the 1.1290 support level with a target of 1.1420 and a stop-loss of 1.1200.
• Sell Euro-Dollar from the 1.1500 resistance level with a target of 1.1200 and a stop-loss of 1.1610.

EUR/USD Technical Analysis Today:

The fate of tariffs between the European Union and the United States continues to dictate the trading direction of the EUR/USD in the coming days. The start of the US jobs report week was bullish, with the Euro-Dollar jumping towards the 1.1450 resistance level, near the pair’s five-week high, before settling around 1.1424 at the time of writing, awaiting further developments.

According to trusted brokerage platforms, Euro trading is experiencing a notable rise with renewed global trade uncertainty due to Donald Trump. Technically, the EUR/USD gains have pushed performance past a chart resistance line at 1.1418, opening the door for a rise to 1.1450, a target we consider suitable for this week’s forecast. However, today’s close must be above the 1.1418 resistance level to confirm its breach, and a retracement during the day is possible. Currency exchange rates tend to remain in contact with the nine-day moving average, implying a slight rebound is possible before the rally resumes. Overall, the EUR/USD has returned to its strong trajectory, and the stronger path is upward in the coming days, driven by a compelling fundamental narrative surrounding escalating global trade tensions.

US President Donald Trump must have been influenced by the calm that followed the US-China trade agreement in early May, as he now accuses China of violating this agreement. Furthermore, after markets closed on Friday, the US president raised tariffs on aluminium and steel. Overall, uncertainty surrounding tariffs has escalated again following Trump’s announcement on Friday evening that he would double tariffs on steel and aluminium, to 50%, effective June 4. Consequently, the EUR/USD pair has returned above 1.1350, US bond yields are seeing a significant increase, while stock futures are seeing a significant decline.

Please keep in mind that the current rise in the Euro’s price is part of the traditional market reaction to escalating tariff tensions. Meanwhile, Trump’s reminder of his support for tariffs and his dissatisfaction with the US trade balance will support the 2025 bullish trend for the foreseeable future. Also, we would not be surprised if the EUR/USD records new record highs as a result.

Be cautious: Tariffs pose a problem for the dollar as they will undermine US economic growth. The problem is that the US economy is still performing well, undermining this premise. Sooner or later, data will begin to show the type of weakness that US dollar sellers have anticipated in recent months. The June data schedule is important because it provides data covering a period that will certainly embody trade uncertainty. With strong demand for the US dollar, large movements will be in response to better-than-expected data that challenges gloomy forecasts, leading to an unbalanced upward reversal for the US dollar (i.e., a drop in the EUR/USD).

Trading Tips:

We still advise selling the Euro against the US Dollar on every strong upward rebound, but without taking risks and while monitoring the factors influencing the trading of this currency pair this week.

Besides the fate of tariffs, everyone will be cautiously awaiting the crucial US Non-Farm Payrolls figures on Friday. The consensus expects a 125,000 job increase in May, with a decline in private sector jobs and indications of job losses in the manufacturing sector. The country’s unemployment rate is expected to remain stable at 4.2%. According to currency experts, if the unemployment rate rises more than expected, we believe the market reaction could be swift. Consequently, the dollar and bond yields are likely to fall as the market rushes to price in data-dependent Federal Reserve interest rate cuts.

Euro Trading Will Monitor ECB Meeting Results

Don’t forget the European Central Bank meeting next Thursday. Although the US dollar’s interest rate is undoubtedly the most important factor, we expect some short-term volatility around the decision. A 25-basis point rate cut is expected to lower the key interest rate to 2.0%. The cut itself is not the decisive factor, but rather the forward guidance that will move the exchange rate. With inflationary pressures subsiding in the Eurozone, there is little incentive for President Christine Lagarde to disregard further interest rate cuts, especially if the ECB believes that US tariffs will negatively impact future growth.

Overall, the continuous flow of cuts is expected to benefit the Eurozone economy, but it will hinder the Euro’s progress. Lagarde is very likely to stick to her usual message: that interest rates are not on a predetermined path and that the ECB remains data dependent. This means more cuts are coming, but there is no need to anticipate a faster pace, nor to bet on more cuts later beyond what is already expected. This will provide limited opportunity to guide Euro exchange rates in any meaningful direction, and movements following the ECB decision are likely to fade as a result.

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The GBPJPY pair formed more of the slow bearish waves, confirming their surrender to the suggested bearish scenario, by moving away from the barrier at 194.55 level, to repeat the pressure on the intraday obstacle at 192.90.

The continuation of providing negative momentum by stochastic will assist in forming an extra decline to target 192.35 level, reaching the main support at 191.70, while breaching the mentioned barrier will cancel the negative suggestion, to provide the price a chance to renew the bullish attempts by its rally towards 195.20 initially.

The expected trading range for today is between 192.35 and 194.20

Trend forecast: Bearish

• The euro initially gapped lower against the Japanese yen during trading on Monday and then continue to drop from there.
• That being said, the market is likely to continue to see a lot of noisy behavior, as the market has been very choppy over the last several weeks.
• In fact, the shape of the candlestick is somewhat like a hammer, but I would also pay attention to the other bits and pieces of technical analysis that could give you a bit of a “heads up” as to where we are going to go next.

Technical Analysis

The technical analysis for this EUR/JPY pair is somewhat bullish, but it is contained within a very well defined consolidation range. The ¥165 level continues to be an area worth watching, as it had been a significant resistance barrier before, and of course it is an area that seen a lot of market memory attached to it in the past. If we can break above that level, then I do think that the euro has a real shot at going much higher against the Japanese yen, but I would point out that this is probably a move that would be more about the Japanese yen than anything else.

On the other hand, if we do fall from here, it’s worth noting that the 50 Day EMA’s is just below, and then underneath there we have the 200 Day EMA which is currently right around the ¥162 level. The market breaking down below that level would be very negative, and it could open up the possibility of a drop toward the ¥155 level, but at this point in time it doesn’t look like we have any real appetite to start buying the yen. Because of this, I think we remain a little bit more “risk on” than would be required for the Japanese yen to suddenly strengthen, and with that I look at the short term pullbacks along the way as potential buying opportunities in this pair.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

• GBP/USD edges lower toward 1.3500 in the European session on Tuesday.
• BoE policymakers testified on the monetary policy before the UK Treasury Select Committee.
• The technical outlook suggests that buyers struggle to retain control.

Following Monday’s rally, GBP/USD loses traction and declines toward 1.3500 in the European session on Tuesday. The technical outlook points to a loss of bullish momentum as investors await US data.

While testifying on the Monetary Policy Report before the UK Treasury Select Committee on Tuesday, Bank of England (BoE) Governor Andrew Bailey noted that they have not seen particular inflation surprises and reiterated that he prefers a gradual and careful approach to policy-easing.

BoE policymaker Swati Dhingra argued that an overly restrictive policy was risking suppressing demand and disincentivizing investment. Meanwhile, BoE policymaker Catherine Mann adopted a more cautious tone, saying that future policy decisions will require certainty that inflation is on track. “Services price inflation is above what I view as consistent with getting Consumer Price Index (CPI) back to target,” Mann added.

Following these mixed remarks, GBP/USD finds it difficult to attract buyers.

In the second half of the day, the US Bureau of Labor Statistics will publish the JOLTS Job Openings data for April. A noticeable increase in this data, with a reading of 7.7 million or higher, could support the USD with the immediate reaction and cause GBP/USD to extend its correction. On the flip side, a disappointing reading below 7 million could hurt the USD and open the door for a rebound in the pair.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart declines toward 50, highlighting a loss of bullish momentum. The 20-period and the 50-period Simple Moving Average (SMA) form the first support level at 1.3500. In case GBP/USD falls below this level and starts using it as resistance, technical sellers could take action. In this scenario, 1.3410 (100-period SMA) and 1.3365 (200-period SMA) could be seen as next support levels.

On the upside, the first resistance level could be spotted at 1.3530 (mid-point of the ascending channel) ahead of 1.3600 (static level, round level) and 1.3700 (static level, round level).