• GBP/USD declines below 1.3000 following Thursday’s impressive upsurge.
• Safe-haven flows continue to dominate the market action on Friday.
• US Nonfarm Payrolls data and Fed Chairman Powell’s remarks on the economic outlook awaited.

GBP/USD climbed above 1.3200 for the first time since early October on Thursday but erased a portion of its daily gains later in the American session. The pair stays under bearish pressure in the European session on Friday and trades below 1.3000.

The broad-based selling pressure surrounding the US Dollar (USD) fuelled GBP/USD rally on Thursday. US President Donald Trump’s aggressive tariffs fed into fears of an economic downturn in the US, forcing the USD to weaken against its peers.

As markets remain risk-averse on Friday, GBP/USD finds it difficult to hold its ground. At the time of press, the UK’s FTSE 100 Index was down nearly 1.5% on the day and US stock index futures were losing between 0.3% and 0.9%.

Later in the day, the US economic calendar will feature the March employment report, which will feature Nonfarm Payrolls (NFP), Unemployment Rate and wage inflation figures.

Markets forecast an increase of 135,000 in NFP in March. A significant negative surprise, with an NFP reading at or below 100,000, could weigh on the USD and help GBP/USD find support. Conversely, an NFP print of 160,000 or higher could have the opposite impact on the pair’s action with the immediate reaction.

Ahead of the weekend, Federal Reserve (Fed) Chairman Jerome Powell will speak on the US economic outlook at the annual conference for the Society for Advancing Business Editing and Writing. Powell will also attend a moderated panel discussion afterward.

In case Powell voices his concerns over the growth outlook, citing the new tariff regime, the USD could come under renewed selling pressure. On the other hand, the USD could end the week on a bullish note if Powell puts more emphasis on the upside risks to inflation outlook and reiterates their willingness to remain patient with regard to further policy easing.

According to the CME FedWatch Tool, investors are currently pricing in about a 32% probability of a 25 basis points Fed rate cut in May. The market positioning suggests that the USD has room on the upside if Powell’s remarks revive expectations for a policy hold at the next meeting.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart dropped below 50, reflecting a bearish tilt in the short-term outlook.

On the downside, 1.2960 (100-period Simple Moving Average (SMA), 50-period SMA) aligns as first support before 1.2935 (lower limit of the ascending channel) and 1.2900 (static level, round level).

In case GBP/USD reclaims 1.3000 (round level, static level), technical buyers could take action. In this scenario, 1.3080 (mid-point of the ascending channel) and 1.3100 (round level, static level) could be seen as next resistance levels.

USD/JPY edged higher in latest intraday trading while trying to recoup some recent losses, as the price also tried to vent off oversold saturation in the Stochastic with positive signals emerging from it.

It comes as the price settles below the pivotal support of 146.65 that was breached yesterday, while hurt by exiting an ascending correctional price channel previously, with the dominance of the main downward trend.

USD/JPY edged higher in latest intraday trading while trying to recoup some recent losses, as the price also tried to vent off oversold saturation in the Stochastic with positive signals emerging from it.

It comes as the price settles below the pivotal support of 146.65 that was breached yesterday, while hurt by exiting an ascending correctional price channel previously, with the dominance of the main downward trend.

Created on April 04, 2025

• The British pound has fallen rather significantly during the trading session on Thursday as we continue to see a lot of risk aversion, especially after the tariff announcement came out of the United States.
• Because of this, we’ve seen a lot of traders run toward the Japanese yen, long considered one of the premier safety currencies in the world.

What will be interesting to see is how the market behaves after we’ve had time to digest all of the news, which of course has been very rapidly released. The Americans have slept massive tariffs on most of the rest of the world, and how certain countries behave will have a major outsized influence on how the markets behave. For example, some of the bigger ones like China and the European Union obviously will be crucial, but there are other countries that will also be moving, both of these groups will more likely than not move this pair, if for no other reason than the fact that the GBP/JPY pair tends to move based on risk appetite more than anything else.

Friday Could Be Wild

During the trading session on Friday, we will get the employment numbers coming out of the United States, which almost always causes quite a bit of volatility as far as risk appetite is concerned. Because of this, it’s very likely that we will continue to see a lot of noisy behavior, and if it’s more of a “risk off day”, then the Japanese yen will continue to strengthen. The ¥190 level is an area that you need to be watching very closely, as it is a large, round, psychologically significant figure, and of course an area that traders will be paying close attention to for any signs of a bounce.

The ¥195 level above is going to be important as well, and if we can break above there then it would be a very bullish sign. That being said, we are nowhere near doing that, so I think more likely than not, we start bouncing around in a bit of a bounce.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

USD/JPY edged higher in latest intraday trading while trying to recoup some recent losses, as the price also tried to vent off oversold saturation in the Stochastic with positive signals emerging from it.

It comes as the price settles below the pivotal support of 146.65 that was breached yesterday, while hurt by exiting an ascending correctional price channel previously, with the dominance of the main downward trend.

USD/JPY Forecast: the USD/JPY currency pair, representing the exchange rate between the U.S. dollar and the Japanese yen, is closely watched by traders and investors alike.

Overview of the USD/JPY Currency Pair

The USD/JPY pair is one of the most actively traded currency pairs in the world, reflecting the economic relationship between the United States and Japan. Both countries have significant global economic influence, making their currencies important in international trade and finance. The movements in this currency pair can be attributed to various factors, including economic data releases, central bank policies, and geopolitical events.

Economic Indicators Impacting USD/JPY

U.S. Economic Data
Economic indicators from the United States play a pivotal role in determining the direction of the USD/JPY pair. Key reports such as gross domestic product (GDP) growth, employment figures, and inflation rates provide insights into the health of the U.S. economy. Strong economic performance often leads to a stronger dollar, as investors seek to capitalize on growth prospects. Conversely, weaker economic data can result in a decline in the dollar’s value against the yen.

Japanese Economic Indicators

Similarly, economic data from Japan significantly impacts the yen’s value. Reports on Japan’s GDP, trade balance, and consumer sentiment help gauge the overall strength of the Japanese economy. A robust economic outlook may bolster the yen, while weak data could lead to depreciation. The Bank of Japan’s policies and responses to economic conditions also play a crucial role in shaping market perceptions of the yen.

Central Bank Policies

Federal Reserve Actions
The U.S. Federal Reserve’s monetary policy decisions are vital for the USD/JPY exchange rate. Changes in interest rates, quantitative easing measures, and forward guidance influence market expectations. When the Fed signals a tightening of monetary policy, the dollar typically strengthens against the yen. On the other hand, accommodative policies may lead to a weaker dollar as investors seek higher yields elsewhere.

Bank of Japan Policies

The Bank of Japan (BOJ) also plays a significant role in the dynamics of the USD/JPY pair. The BOJ’s stance on interest rates and its approach to economic stimulus impact the yen’s value. If the BOJ maintains a dovish stance, it may lead to yen weakness, while a shift towards tightening could strengthen the currency. The BOJ’s interventions in the foreign exchange market can also cause significant fluctuations in the USD/JPY exchange rate.

Market Sentiment and Geopolitical Factors on USD/JPY

Risk Sentiment
Market sentiment is a crucial driver of currency movements. In times of uncertainty, investors tend to favor currencies perceived as more stable. The yen is often viewed as a currency that can provide stability during market volatility. Thus, shifts in risk sentiment can lead to movements in the USD/JPY pair, with heightened uncertainty typically resulting in yen appreciation.

Geopolitical Events
Geopolitical tensions and events can create significant volatility in the foreign exchange market. Developments such as trade negotiations, political instability, or natural disasters in either the U.S. or Japan can influence investor behavior and, consequently, impact the USD/JPY exchange rate. Monitoring these events is essential for understanding potential market reactions.

Future Outlook for USD/JPY

Economic Recovery and Growth Prospects
Looking ahead, the economic recovery in both the U.S. and Japan will be a key factor influencing the USD/JPY exchange rate. Strong growth in the U.S. economy could lead to a stronger dollar, particularly if the Federal Reserve continues to adopt a hawkish stance. Conversely, Japan’s economic performance and the BOJ’s policy direction will determine the yen’s strength.

Inflation and Interest Rate Expectations
Inflation trends in both countries will significantly impact monetary policy decisions. Rising inflation in the U.S. may prompt the Federal Reserve to raise interest rates, supporting the dollar. In Japan, however, the BOJ has historically maintained a low-interest-rate environment, which could keep the yen under pressure. Monitoring inflation data will be essential for anticipating future movements in the USD/JPY pair.

Global Economic Influences
Global economic developments, including trade relationships and international market trends, will also shape the USD/JPY outlook. As the global economy becomes more interconnected, external factors can have significant ramifications for currency pairs. Staying informed about global economic conditions will be crucial for understanding the potential direction of the USD/JPY exchange rate.

Conclusion

The USD/JPY currency pair is influenced by a myriad of factors, including economic indicators, central bank policies, market sentiment, and geopolitical events. Understanding these dynamics is essential for anyone looking to navigate the foreign exchange market effectively. As we approach the future, keeping a close watch on economic developments and market trends will provide valuable insights into the potential movements of the USD/JPY pair. With careful analysis and informed decision-making, traders can better position themselves to respond to the ever-changing landscape of the currency market.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.

April 3, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: EUR/USD Jumps Above 1.10 on US Recession Fears

The Euro (EUR) rallied sharply against the US Dollar on Thursday after President Trump’s imposition of tariffs increased fears over the US and global economy and sparked increased recession talk.

Danske Bank commented; “The new tariffs were generally stronger and broader than we and markets expected, and sent shockwaves through global markets amid worries that the aggressive duties will slow growth, hit corporate earnings, and increase inflation.”

There are fears that the Euro-Zone will be hit hard, but the Euro gained defensive support with the Euro to Dollar (EUR/USD) exchange rate hit 6-month highs just above the key 1.1000 level.

An exodus from US capital markets could support the Euro and undermine the dollar.

ING commented; “While a global trade war in theory is a euro-negative, the soft underbelly of the US economy is the dominant factor for EUR/USD right now. A much sharper sell-off in US equities, dragging US rates even lower, adds another nail in the coffin of US exceptionalism and could send EUR/USD over 1.10.”

It added; “Major medium-term resistance sits in the 1.11/12 area. It’s hard to call a major break of that unless US activity craters.”

According to Danske Bank; “we expect consolidation around current levels in the near term, with risks tilted to the upside.”

As part of its wider tariff plan, the US Administration has imposed a 20% tariff on goods imports from the EU.

At this stage, the EU has not announced any formal retaliation, but the rhetoric is tough.

According to European Commission chief Ursula von der Leyen said the new tax imports will see uncertainty spiral causing dire consequences for millions of people around the globe”.

She vowed that Europe would take a unified approach and warned that it is preparing countermeasures in case negotiations fail.

She added; “If you take on one of us, you take on all of us.”

There are potential interest rate implications with markets now pricing in over a 90% chance that the ECB will cut rates this month.

The chances of a May Fed rate cut have also increased to around 20% with around a 75% chance of a move by mid-year.

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April 3, 2025 – Written by Frank Davies

STORY LINK British Pound Climbs to Six-Month Best Against US Dollar as Trump Unveils Tariffs

At the time of writing, Pound US Dollar (GBP/USD) exchange rate was trading at $1.3148 – its highest level since October 2024 and up 1.3% from Wednesday.

The US Dollar (USD) suffered a sharp decline on Wednesday evening and into Thursday’s session after US President Donald Trump introduced sweeping new tariffs.

On what he declared ‘liberation day’, Trump announced a blanket 10% tariff on all imported goods, alongside increased reciprocal tariffs on countries that impose taxes on US exports.

The move intensified concerns that the US economy could slide into recession this year. Analysts at Barclays warned of a ‘high risk’ of recession, with rising inflation and higher unemployment adding to the economic uncertainty.

In response, USD tumbled, with the US Dollar index – which tracks the currency’s performance against a basket of rivals – plunging nearly 1.4% to its lowest level since October 2024.

Meanwhile, the Pound (GBP) capitalised on the US Dollar’s weakness, propelling GBP/USD to its highest level in six months.

While the UK will be affected by the new tariffs, the economic impact is expected to be significantly less severe than in the US. British exports to the US will face a 10% tariff, but this is a milder blow compared to the broader trade restrictions imposed on other nations.

Looking ahead, Trump’s aggressive tariff policy is likely to fuel further volatility in currency markets as traders assess the potential fallout and watch for retaliatory measures from other economies.

If global trade tensions escalate and recession fears deepen, the US Dollar could remain under pressure.

In addition, upcoming US economic data may influence GBP/USD. Friday’s non-farm payrolls report is expected to show a slowdown in job growth, which could further weigh on the ‘Greenback’ if it reinforces concerns about the health of the US economy.

Federal Reserve Chair Jerome Powell is also set to speak on Friday. Should he express worries about the economic impact of the trade war, GBP/USD could climb even higher, potentially testing new multi-month highs.

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Created on April 03, 2025

• During Thursday’s trading session, the bears’ control over the USD/JPY pair increased, with losses extending to the 146.80 support level.
• This is the lowest for the pair in over three weeks, before stabilizing around 147.25 at the time of writing.
• The pair’s losses increased as investors flocked to safe-haven assets after US President Donald Trump announced comprehensive reciprocal tariffs, raising fears of a devastating global trade war.

Trump imposed additional tariffs of 34% on China, bringing the total tariffs to 54%. Other major economies facing hefty tariffs include the European Union (20%), Japan (24%), India (26%), in addition to a base tariff of 10% on imports from all countries. Earlier this week, Bank of Japan Governor Kazuo Ueda warned that the new US tariffs could significantly impact global trade and economic growth. While the Bank of Japan is expected to raise interest rates again later this year, uncertainty about global trade and domestic economic conditions continues to overshadow the outlook.

Trading Tips:

We still recommend buying the US dollar against the Japanese yen, but without risk, spreading your trading amount across multiple levels, and monitoring the factors affecting the currency pair’s performance.

Japanese Stocks Negatively Affected by Trump’s Tariff Announcement

During today’s trading session and across stock trading platforms, the Nikkei 225 index fell 2.77% to close at 34,736 points, while the Topix index fell 3.08% to 2,569 points. Japanese stocks fell to their lowest levels in several months after US President Donald Trump announced comprehensive reciprocal tariffs, raising fears of a global trade war that could destabilize major economies.

Trump imposed 24% tariffs on Japanese goods, along with a 25% tariff on auto imports, dealing a severe blow to the Japanese auto industry. In response, Japanese Trade Minister Yuji Muto stated that his country would continue to request an exemption, announcing the formation of a task force to assess the impact of the US tariffs.

According to trading, all sectors declined, with heavy losses among the index’s leading companies, such as Mitsubishi UFJ (-7.2%), Toyota (-5.2%), Kawasaki Heavy Industries (-7.1%), Nintendo (-3.3%), and Advantest (-4.5%). In corporate news, Nissan shares fell 3.7% after reports confirmed it had suspended part of its production line in Mexico as previously planned.

Bank of Japan Governor Warns of Global Trade Risks

This week, Bank of Japan Governor Kazuo Ueda warned that the new US tariffs could have a significant impact on global trade and economic growth. In his speech to the Japanese parliament, Ueda stressed the uncertainty surrounding the potential effects of reciprocal tariffs on trade flows, business sentiment, and inflation. The new tariffs, which take effect on April 3, include 25% tariffs on car imports. These tariffs are in addition to existing US tariffs on aluminium and steel, and higher tariffs on all Chinese imports.

Ueda intends to raise these concerns at the upcoming G20 meeting, where US trade policies and their implications will be a major point of discussion. Analysts indicate that the economic fallout could influence the Bank of Japan’s interest rate decision, with a rate hike expected in the third quarter of 2025, possibly in July.

USD/JPY Technical analysis and Expectations Today:

According to the daily chart performance, the bears’ control over the USD/JPY pair is strengthening, and recent losses may push some technical indicators towards strong oversold levels, led by the Relative Strength Index (RSI) and the MACD indicator. Therefore, we recommend considering buying from the support levels of 146.70, 145.80, and 145.00, respectively. Conversely, on the same timeframe, the 152.00 resistance will remain the most important for the bulls to take control of the USD/JPY trend. Technically, the pair will continue to lean downwards until the reaction to the US jobs data announcement tomorrow, which will have an impact on market expectations for the future of the US Federal Reserve’s policies.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.