The USD/JPY pair surged higher on Friday, lifted by a strengthening U.S. Dollar (USD) in the wake of the Federal Reserve’s decision to maintain interest rates and renewed optimism surrounding U.S.-UK trade relations. Market sentiment was buoyed after President Donald Trump hailed a “major breakthrough” in trade ties with the United Kingdom. However, enthusiasm was tempered by the revelation that a 10% tariff on British goods will remain in place, limiting the scope of the agreement’s impact.
The U.S. Dollar Index (DXY) broke decisively above the key psychological barrier of 100.00, underpinned by solid economic indicators and the Fed’s steady policy tone. Weekly U.S. jobless claims fell to 228,000 for the period ending May 3, down from 241,000 in the previous week, pointing to sustained labor market resilience.
In contrast, the Bank of Japan’s (BoJ) minutes from its March policy meeting revealed a more cautious stance. Policymakers expressed concern about the adverse effects of U.S. tariffs on Japan’s export-driven economy, highlighting the growing policy divergence between the Fed and the BoJ—an imbalance that continues to support the dollar against the yen.
Technical Analysis:
From a technical perspective, USD/JPY maintains a bullish posture, trading just below 146.00 after touching an intraday peak of 146.18. The Relative Strength Index (RSI) is at 54.16, indicating a neutral stance but with bullish undertones. Meanwhile, the Moving Average Convergence Divergence (MACD) is firmly in buy territory, reinforcing upward momentum.
Short-term moving averages confirm the positive trend, with the 10-day Exponential Moving Average (EMA) at 143.90 and the 10-day Simple Moving Average (SMA) at 143.69—both supporting further gains. However, long-term resistance looms at the 100-day SMA (150.55) and the 200-day SMA (149.58), levels that could limit any sustained breakout.
Immediate support is located at 144.78, 144.63, and 144.56, while key resistance zones are identified at 146.18, 146.42, and 148.35.
Outlook:
The USD/JPY pair remains tilted to the upside as long as it holds above its immediate support levels. Investors are expected to watch upcoming U.S. economic releases and evolving geopolitical developments closely, which could inject fresh volatility into the pair and either reinforce or challenge the current bullish bias.
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