On Wednesday, March 12th, before the European market opened, the US dollar/Japanese yen rebounded and remained above the 148.00 level. The market's concerns about the prospect of Trump's trade tariffs, coupled with optimism in global equity markets, have weakened the attractiveness of the safe haven currency, the Japanese yen. At the same time, the Producer Price Index (PPI) in Japan shows persistent inflationary pressures, which may push the Bank of Japan to further tighten monetary policy. However, the expectation of interest rate cuts by the Federal Reserve and concerns about a slowdown in the US economy have limited the upward potential of the US dollar, adding complexity to the trend of the US dollar/Japanese yen.

Fundamental analysis

The current volatility of the US dollar/Japanese yen is driven by multiple fundamental factors. Firstly, Trump's remarks on trade tariffs have become the focus of the market. On Tuesday, he threatened to impose a 50% tariff on Canadian steel and aluminum, although it was later eased by Ontario's suspension of the US electricity surcharge. Japanese Trade Minister Yoji Muto stated that he was unable to obtain a clear commitment from US officials regarding Japan's exemption before the tariffs came into effect on Wednesday. This uncertainty has weakened the position of the Japanese yen as a safe haven asset, especially against the backdrop of rising risk appetite in global equity markets.

In terms of domestic data in Japan, the February PPI released on Wednesday showed that the annual wholesale inflation rate slowed down to 4.0%, slightly lower than the previous month's 4.2%. However, considering that Japan's consumer inflation has exceeded the central bank's target for nearly three consecutive years, this data still strengthens market expectations for further tightening policies by the Bank of Japan. Bank of Japan Governor Kazuo Ueda pointed out that the rise in long-term interest rates reflects the market's outlook for short-term policy rates, which is a normal phenomenon, but it may also push up government financing costs. In addition, large Japanese companies are expected to significantly increase salaries for the third consecutive year to address inflation and alleviate labor shortages. This not only supports the policy adjustment of the Bank of Japan, but also provides support for Prime Minister Shigeru Ishiba's efforts to boost consumer spending. The yield of 10-year Japanese treasury bond has been close to the highest point since October 2008, indicating the market's recognition of the policy shift.

On the other hand, the expectation of interest rate cuts by the Federal Reserve has become a key factor contributing to the weakness of the US dollar. The market expects three 25 basis point interest rate cuts within the year, supported by weak non farm payroll data last Friday, which suggests a cooling of the US labor market. Amid concerns about tariff driven economic slowdown, the yield on 10-year US Treasury bonds has hovered around this month's low, and the US dollar has fallen to its lowest point since mid October. The trend of narrowing the US Japan interest rate differential has to some extent limited the downward trend of the Japanese yen, while also limiting the upward trend of the US dollar/Japanese yen. The market is waiting for the US Consumer Price Index (CPI) data to further assess the Federal Reserve's policy path and demand for the US dollar.

Technical analyst interpretation:

4-hour chart analysis

On the 4-hour chart, the price of USD/JPY oscillates within the range of 148.00 to 150.00. The recent trend shows that the price rebounded after reaching the support level of 148.00, indicating that this level has strong technical significance. RSI is around 53, and the market is in a neutral state with no obvious overbought or oversold signals. The price fluctuates between multiple moving averages and rebounds after breaking through 148.00 in the short term, indicating that bulls are trying to dominate, but a clear trend has not yet formed. 150.00 serves as an upper resistance, and if it breaks through, it may open up further upward space. Otherwise, if it falls below 148.00, caution should be taken against downside risks.

Daily chart analysis

Switching to the daily chart, the US dollar/Japanese yen has shown a downward trend recently, with prices falling from high levels and briefly dropping below 147.00, reaching a low of around 146.50. The MACD indicator has turned negative, indicating that bearish pressure still exists; RSI has fallen to 36, approaching oversold territory, indicating a short-term rebound opportunity. The key support levels of 147.50 and 148.00 are currently showing resilience, and if they fall behind 146.50, they may accelerate their descent to the 145.00 line. On the contrary, if the price returns above 148.00 and stabilizes, it may challenge the 150.00 level. The current trend indicates that the market is seeking direction between support and resistance, focusing on key breakthroughs.

Comprehensive technical judgment

In the short term, 148.00 is the long short watershed for the US dollar/Japanese yen. The rebound momentum of the 4-hour chart is intertwined with the oversold signal of the daily chart. If the support is effective, a long position may push the price up to 150.00; If lost, the bearish target will go straight to 146.50 or even lower.