Image Credit: Bloomberg

The Japanese Yen (JPY) continues to hold firm against the US Dollar, keeping the USD/JPY pair below the 148.00 level during the early European session on Thursday. Concerns over potential economic consequences from US President Donald Trump's trade tariffs, coupled with expectations that the Bank of Japan (BoJ) will continue tightening interest rates due to rising inflation in Japan, are supporting the safe-haven appeal of the JPY.

Expectations of further BoJ tightening have kept Japanese government bond yields near multi-year highs, widening the rate differential between Japan and other countries, which benefits the lower-yielding JPY. Meanwhile, the US Dollar remains weak, trading near a multi-month low amid expectations of further interest rate cuts by the Federal Reserve, putting additional pressure on the USD/JPY pair.

From a technical perspective, the failure of the USD/JPY pair to hold above the 149.00 mark overnight and the subsequent pullback confirm a bearish outlook. Daily chart oscillators remain firmly in bearish territory, signaling that the path of least resistance is downward. A move below the 148.00 level could bring the next support level around 147.25-147.20, with further downside towards the 146.55-146.50 area, where the multi-month low was seen on Tuesday.

On the upside, the 148.60-148.70 zone now serves as immediate resistance, ahead of the 149.00 level and the overnight swing high near 149.20. A sustained break above this zone could trigger a short-covering rally, potentially pushing the USD/JPY pair towards the 150.00 psychological level, followed by the 150.55-150.60 region, and the monthly swing high around 151.00-151.30.

Paraphrasing text from "FXSTREET"all rights reserved by the original author