EC markets official website: The yen remains bullish due to increased safe-haven demand

The Japanese yen was aggressively bought in Asian trading on Thursday as global investors took refuge from President Donald Trump's sweeping imposition of reciprocal tariffs. Fears grew that the move could reshape the global trading system, negatively impact the world economy and send shockwaves through global financial marekts. That, combined with broad dollar weakness, dragged the pair to more than three-week lows.

At the same time, investors now seem convinced that the Bank of Japan will raise interest rates further amid rising inflation in Japan.EC Markets Forex PlatformA sharp divergence from expectations that the Federal Reserve will soon resume its rate-cutting cycle amid a tariff-driven U.S. economic slowdown will lead to a further narrowing of interest-rate differentials between Japan and the United States, supporting the prospect of further appreciation of the low-yielding yen.

From a technical standpoint, the intraday drop below the 100-period Simple Moving Average (SMA) on the 4-hour chart builds on the recent breakout of a multi-week ascending channel. This, together with bearish oscillators on the daily chart, supports the prospect of further near-term depreciation of the USD/JPY. Therefore, a subsequent decline to the 147.00 mark, towards the 146.55-146 zone, or to the multi-month low hit in March, looks likely.

On the other hand, any attempted recovery is now likely to hit a snag near the 148.00 mark, but continued volatility could trigger short covering and a rally to the 148.65-148 zone. That said, further gains could attract new sellers near the 149.00 mark and limit the US-Japan pair near the 149.35-149 zone or the 100-issue SMA on the 4-hour chart. The latter should be a key turning point that, if cleared, could eliminate the negative outlook and pave the way for further gains.