Japanese Yen and Aussie Dollar Forecast: Tariffs, the BoJ and and Beijing in Spotlight

Trade Developments and USD/JPY Volatility

As BoJ policymakers walk a tightrope amid trade friction and inflation pressure, USD/JPY volatility looms.

Unlimited Chief Investment Officer Bob Elliott remarked:

“It seems Treasury Secretary Scott Bessent’s quick-face saving deals strategy isn’t working even with close allies who appear unwilling to fulfill their roles in the Kabuki theatre.”

Stalled trade negotiations may dampen US demand for Japanese goods. With the US accounting for 19% of Japan’s March exports and trade contributing over 50% to GDP, the implications are significant. A weaker export outlook may also delay Bank of Japan rate hikes, curbing Japanese Yen demand.

BoJ Governor Kazuo Ueda recently affirmed the Bank’s commitment to tighten policy further if inflation continues moving toward the 2% target. However, he also warned about economic uncertainties and the potential need for policy support, suggesting a near-term hold if trade terms deteriorate. His comments reinforce the importance of easing global trade tensions as underlying inflation accelerated in March.

USD/JPY: Key Scenarios to Watch

Safe-haven flows into the Yen could weigh on USD/JPY, while improved risk sentiment may provide support.

• Bullish Yen Scenario: a breakthrough in trade negotiations, rising risk aversion, or hawkish BoJ rhetoric—may pull USD/JPY lower toward the 140.309 support.
• Bearish Yen Scenario: stalled talks, easing global risks, or dovish BoJ signals—could lift the pair toward 145.

USD/JPY Daily Outlook: Fed and Tariffs in Focus

Later in the US session, Fed commentary may drive price action. Hawkish remarks, following Fed Chair Powell’s warning of slower growth and higher prices, could lift USD/JPY toward 145. Conversely, support for multiple rate cuts to counter tariff effects on the economy could send the pair toward the 140.309 support level.

Tariff-related headlines also need consideration. The threat of higher tariffs and slow progress toward trade deals could trigger another flight to safety, pressuring the USD/JPY. In contrast, optimism over softer tariffs or a US-China agreement could boost risk appetite, weighing on Yen demand.

Potential USD/JPY Moves:

• Bullish US dollar Scenario: Easing tariff tensions or hawkish Fed rhetoric could drive the USD/JPY pair toward 145.
• Bearish US dollar Scenario: Renewed tariff threats or dovish Fed commentary may push the pair toward the 140.309 support level.

Explore expert USD/JPY forecasts and setups in our latest analysis.

AUD/USD Outlook: China, Trade, and the RBA

The Aussie dollar remains sensitive to trade developments, especially involving China, Australia’s largest trade partner. Hopes of US-China tariff negotiations could lift AUD/USD. Lower tariffs would boost Chinese demand, benefiting Australia’s trade terms and economic outlook. With one-third of Australian exports bound for China and a trade-to-GDP ratio above 50%, the influence of tariff developments on the RBA’s rate path is significant.

An upswing in exports could support a less dovish RBA rate path. However, an escalation in the US-China trade war could impact demand, raising bets on multiple RBA rate cuts. A more dovish RBA stance would pressure Aussie dollar demand.

AUD/USD: Market-Moving Factors

• Bullish Aussie dollar Scenario: A de-escalating US-China trade war or hawkish RBA rhetoric may send the AUD/USD pair above the 200-day Exponential Moving Average (EMA), targeting $0.65.
• Bearish Aussie dollar Scenario: Tariff threats or dovish RBA signals could drag the pair below the $0.63623 support level, bringing the 50-day EMA into play.

For a comprehensive analysis of AUD/USD trends and trade data insights, see our top trading signals amid tariff tensions here.

Aussie Dollar Daily Outlook: Fed Speakers in Focus

US session developments will influence US-Aussie rate differentials. A dovish Fed stance may narrow the differential, favoring the Aussie and sending the AUD/USD pair above the 200-day EMA and toward $0.65.

However, Fed calls to delay rate cuts in response to tariffs could widen the rate differential, pushing the pair below the $0.6323 support level.

Key Market Drivers to Watch Today:

• USD/JPY: US-Japan trade and BoJ commentary.
• USD/JPY and AUD/USD: Fed tone and tariff rhetoric.
• AUD/USD: RBA statements, Beijing stimulus, and US-China trade outlook.

Review today’s trade setups in our latest USD/JPY and AUD/USD reports.