USD/JPY Forecast: BoJ & Risk Weigh on Yen
- Global markets are showing sensitivity to both geopolitical events and upcoming economic data.
- The BoJ's move to moderate its tapering efforts comes after weak demand in previous Japanese Government Bond (JGB) auctions led to increased yields on longer-dated bonds.
- Elsewhere, safe-haven assets are gaining traction as the conflict between Israel and Iran enters its fifth day.
The Bank of Japan‘s steady rates and plans for slower tapering are currently influencing the USD/JPY pair, pressuring it downward amid global market volatility.The yen shows subtle appreciation,while focus intensifies on the upcoming U.S. retail sales data, expected to indicate a decline. Geopolitical tension stemming from the Israel-Iran conflict elevates safe-haven assets. Discover how these factors interplay, perhaps weakening the dollar and strengthening the yen. The DAX dips as well due to global unease. News directory 3 breaks down the technical analysis. What’s the next move? Discover what’s next …
Global markets react to geopolitical tensions and economic data
Updated June 17, 2025
Global markets are showing sensitivity to both geopolitical events and upcoming economic data. The USD/JPY pair is experiencing downward pressure following the Bank of Japan’s (BoJ) decision to maintain its interest rates at 0.5%. The central bank also signaled a gradual slowdown in its balance sheet reduction beyond March 2026.
The BoJ’s move to moderate its tapering efforts comes after weak demand in previous Japanese Government Bond (JGB) auctions led to increased yields on longer-dated bonds. This action is intended to stabilize the bond market.Meanwhile, the yen has seen a slight appreciation.
Elsewhere, safe-haven assets are gaining traction as the conflict between Israel and Iran enters its fifth day. This ongoing tension in the Middle east is fueling demand for safer investments.
Attention now turns to U.S. retail sales figures, with expectations of a 0.7% month-over-month decline for May, a stark contrast to April’s 0.1% increase. This anticipated drop reflects weakening consumer confidence, influenced by a cooling labor market and uncertainty surrounding trade policies.
Weaker-than-expected retail sales could heighten concerns about the overall health of the U.S. economy, potentially weakening the dollar and further bolstering the yen’s safe-haven appeal.
USD/JPY Technical Analysis
The USD/JPY pair is currently trading within a defined range, with an upper limit around 145 and a lower limit near 142. The pair is positioned above its 50-day Simple Moving Average (SMA),and the Relative Strength Index (RSI) remains mostly above 50.
For buyers to gain momentum, they need to surpass the 145 mark, targeting the May high of 148.65. Conversely, a break below the 50 SMA at 144 and the 142.509 support level could trigger a decline toward 140.00.
DAX Performance
The DAX, along with other European markets, opened lower amid the ongoing conflict between Israel and Iran. President Trump’s call for Iranians to evacuate Tehran and his early departure from the G7 Summit in Canada have further contributed to risk aversion.
rising oil prices, driven by increased risk premiums, are also a factor. While benefiting energy stocks, these higher prices raise concerns about persistent inflation.
Investors are also awaiting the German ZEW economic sentiment data, which is expected to show improved morale, rising to 35 from 25.2 in May. The current situation assessment is also projected to improve to -74 from -82.
With the July 9 deadline for potential unilateral tariffs approaching, market participants remain cautious.
DAX Technical Analysis
after reaching a record high of 24,490, the DAX has retreated to the 23,300 support zone, coinciding with the May 26 low and the March high.The RSI is currently below 50, indicating potential selling pressure.
A break below this support level could lead to further declines toward 23,000, a key psychological level and the 50 SMA. However, if the 23,300 support holds, buyers may attempt to push the index back toward 24,000 and potentially new record highs at 24,490.
What’s next
Market participants will closely monitor U.S.retail sales data and developments in the Middle East conflict for further direction. German ZEW economic sentiment data will also provide insights into the economic outlook.