The USD/JPY outlook suggests a scramble for safety in the yen as market participants worry about Trump’s tariffs. At the same time, stalled talks between Russia and Ukraine have lowered the likelihood of a near-term end to the war. 

The yen soared to new highs on Thursday as traders scrambled for safe assets amid economic and geopolitical uncertainty. The global economy is under threat as Trump marches on with new tariffs. On Tuesday, the US president announced a likely 25% tariff on automobiles that will affect most major economies, especially the Eurozone. These new tariffs follow duties on steel, aluminum, and Chinese goods. At the same time, markets expect a 25% tariff on Mexico and Canada in March. 

The tariffs might ignite a global trade war that would negatively impact the global economy. Consequently, risk appetite will continue dropping, supporting safer currencies like the yen and the US dollar. 

Elsewhere, the FOMC meeting minutes revealed that policymakers were worried Trump’s tariffs would lead to a spike in inflation. Therefore, there is a high chance the Fed will keep interest rates elevated. 

At the same time, tensions between Russia and Ukraine have increased since Trump’s recent involvement. Ukraine is now accusing Russia and the US of secret deals that have caused a pause in planned talks. Continued geopolitical tensions will increase demand for the traditionally safe yen. 

USD/JPY key events today

• US unemployment claims

USD/JPY technical outlook: Price in freefall towards 149.50

(Click on image to enlarge)

USD/JPY 4-hour chart

On the technical side, the USD/JPY price has collapsed further and broken below the 151.02 support level. This move has pushed the price far below the 30-SMA, indicating a strong bearish lead. At the same time, the RSI has dipped into the oversold region, indicating solid bearish momentum. 

Bears took charge when the price met its resistance trendline. The reversal was sharp, pushing the price below the 30-SMA. Moreover, bears confirmed a continuation of the downtrend when the price broke below 151.01 to make a lower low. 

Given the strong bearish bias, USD/JPY might soon reach the 149.50 level. However, since the RSI is in the oversold region, the price might soon pause before continuing lower.

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