USDJPY forecast: the yen attempts to recover after a fall

The USDJPY rate may rise to 150.20 amid Japan’s negative economic data and in anticipation of the BoJ governor’s speech. Find out more in our analysis for 4 March 2025.

USDJPY forecast: key trading points

• Japan’s Household Confidence Index: previously at 35.2, currently at 35.0
• Japan’s unemployment rate: previously at 2.4%, currently at 2.5%
• A speech by Bank of Japan Governor Kazuo Ueda
• USDJPY forecast for 4 March 2025: 150.20 and 148.50

Fundamental analysis

Japan’s Household Confidence Index is a gauge of consumer sentiment, reflecting the population’s confidence in the economy and future income. It is based on surveys of five thousand households about financial prospects, employment, and willingness to spend. A reading above 50.0 indicates optimism, while a reading below 50.0 points to pessimism. The index is crucial for forecasting consumer spending and the country’s economic performance.

While the forecast for 4 March 2025 expected the index to remain unchanged at 35.2, the actual reading decreased to 35.0. Loss of confidence in the country’s economic state by the population typically adversely affects the value of the national currency. Given that the indicator is below 50.0, this could trigger growth in the USDJPY rate.

Fundamental analysis for 4 March 2025 takes into account that Japan’s unemployment rate has increased to 2.5%. Although it is a slight uptick, together with other data, it could negatively impact the yen.

Bank of Japan Governor Kazuo Ueda is expected to deliver a speech today, 4 March 2025. The BoJ has raised the key interest rate to 0.50% in recent months, aiming to achieve sustainable inflation at 2.00%. Ueda noted that the Japanese economy is moderately recovering, although some uncertainties remain.

In his speech, Ueda may address the following issues:

• Monetary policy: assessing the current rate and its possible changes depending on economic data
• Inflation and wages: methods of achieving the inflation target and the role of wages in these processes
• Global economic factors: the impact of the global economy and external circumstances on the Japanese economy

USDJPY technical analysis

Having tested the lower Bollinger band, the USDJPY price has formed a Hammer reversal pattern on the H4 chart. At this stage, it is moving upwards following the pattern signal. Since the quotes have rebounded from the support level and now continue to move within the descending channel, they are expected to pull back further up to the resistance level.

The target for a correction is 150.20. A rebound from this level may open the potential for a more substantial downtrend.

However, the USDJPY forecast for today also takes into account an alternative scenario, where the price plunges to 148.50 without testing the resistance level.

Summary

Coupled with the USDJPY technical analysis, the decline in Japan’s economic indicators suggests a correction towards the 150.20 resistance level before a decline.