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• The USD/JPY weekly forecast indicates rising economic uncertainty in Japan.
• Trump recently imposed a tariff on steel and aluminum imports.
• Tariff fears overshadowed a downbeat US inflation report.

The USD/JPY weekly forecast has turned around as fears of the impact of Trump’s tariffs on Japan’s economy increased.

Ups and Downs of the USD/JPY Pair

The USD/JPY currency pair experienced a slightly bullish week as the dollar recovered along with Treasury yields. Meanwhile, the yen gave up some gains as market participants worried about the impact of Trump’s tariffs on Japan. 

Trump imposed a tariff on steel and aluminum imports, igniting trade wars with Canada and the Eurozone. This escalated fears of a global economic slowdown. As a result, traders sought safety in US Treasuries. Meanwhile, the tariff concerns overshadowed a downbeat US inflation report. 

On the other hand, the yen eased as market participants focused on the vulnerable, export-reliant Japanese economy. Trump’s tariffs might hurt the economy.

Next Week’s Key Events for the USD/JPY Pair

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Next week, market participants will focus on monetary policy meetings by the Bank of Japan and the Fed. Moreover, the US will release its retail sales report, showing the state of consumer spending. 

Economists believe both the Bank of Japan and the Fed will keep interest rates unchanged. However, BoJ policy makers might maintain a hawkish tone, signaling future hikes. Meanwhile, the Fed might remain cautious due to uncertainty regarding Trump’s tariffs.

USD/JPY Weekly Technical Forecast: Eyeing the Key 149.00 Level

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On the technical side, the USD/JPY pair's price climbed after meeting the 0.618 Fib retracement. However, the price was still below the 22-SMA. At the same time, the RSI traded below 50, supporting strong bearish momentum. Since the price broke below the 22-SMA, it has maintained its position below this line, indicating a strong downtrend. Furthermore, the price consistently made lower highs and lows. 

The downtrend recently made a milestone move by breaking below the 149.00 support level. After the break, the price rose to retest this level as resistance. If it holds firm, bears might resume the downtrend. However, the price would have to break below the 0.618 Fib retracement. This would allow the USD/JPY currency pair to target the 142.00 support level. 

On the other hand, if bears fail to break below the 0.618 Fib, bulls might push the price back above the 149.00 level. A break above the SMA would signal a likely reversal.

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